Archive for December, 2011

Many States Require Car Dealers to Provide an Auto Dealer Bond – Part 1

Written by JoAnn Smith on December 26th, 2011. Posted in Surety Bond Blog

Small businesses face some of the same challenges as large corporations. One of the many responsibilities that SBAs have is legally operating within one or mores states by virtue of a business license. Some businesses can simply register a name and start operating. Other businesses like car dealerships, however, have additional requirements that must be met in order to legally operate within their state. In the case of the car dealership, many states require a car dealer business to provide a surety bond in order to obtain their car dealer license. It might help to examine several states and their specific requirements in order to gain a better grasp on this particular requirement. Let’s start with the State of Florida. According to the Florida Department of Highway Safety and Motor Vehicles, the definitive authority on issuing car dealer licenses in the state of Florida, anyone who buys and/or sells three or more motor vehicles in a given 12-month period is considered to be a motor vehicle dealer and thus is required to have a dealer license issued by the State of Florida. Motor vehicle dealers are licensed and regulated by the Division of Motorist Services under Section 320.27 Florida Statutes. In contrast, mobile home dealers are licensed under Section 320.77 Florida Statutes, and recreational vehicle dealers are licensed under Section 320.771 Florida Statutes. Coincidentally, each of the three types of dealer licenses requires a distinct type of motor vehicle dealer surety bond. A dealer surety bond, also know as MVD bond, car dealer bond, or auto dealer bond, is a three party agreement where the dealer, who is considered the principal, agrees to abide by the applicable laws and regulations set forth by a second party, known as the obligee. In the case of a Florida motor vehicle dealer, the Florida DHSMV is considered the “obligee” in this three party agreement, and they require this surety bond so that there is some level of protection in the event the dealer fails to fulfill obligations to a customer or vendor related to the purchase and/or sale of one or more motor vehicles (pursuant to Chapter 319 and 320, Florida Statutes). The final party in the three party agreement is the surety. This company, often an insurance company, underwrites the surety bonds and ultimately is at risk for the face amount of the surety bond. The surety bond amount required depends on the type of motor vehicle dealer. The surety bond amounts and required bond forms are as follows:
  • For motor vehicle dealers, the requirement is an original $25,000 surety bond (HSMV form 86020) or a letter of credit (HSMV form 86057).
  • For motor home dealers, the requirement is an original $25,000 surety bond (HSMV form 86018) or a letter of credit (HSMV form 86058).
  • For recreational vehicle (RV) dealers, the requirement is an original $10,000 surety bond (HSMV form 86019).
In Florida, failure to meet all of the licensing requirements, including, but not limited to obtaining the proper dealer surety bond, constitutes a second-degree misdemeanor and is punishable by up to six months in jail and/or fine of $500. According to the Florida DHSMV, such person will also be liable under civil law for violation of Florida’s Deceptive and Unfair Trade Practices Act, and be subject to fines of up to $5000 per violation, and may face a permanent injunction issued by a circuit court. In Part 2, we will examine the auto dealer surety bond requirements in the State of Texas.

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Freight Broker Training

Written by Surety Bond Expert on December 24th, 2011. Posted in Surety Bond Blog

Freight Broker Training - Freight Broker BondsFreight brokers are required to carry surety bonds known as freight broker bonds, and as such, is fully licensed to provide these bonds to the freight broker industry. For those that are also interested in learning more about the freight broker business, we encourage you to visit This freight broker license course is unmatched in the online training industry, according to their website. They seem to have some tools that other online broker courses do not offer, like load board access, transportation database, license filing service, and their broker courses are half of the price of some others. It’s an easy to understand self study freight broker course as well as a transportation network for you to jump start your freight brokerage career.


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New California Contractors License Bond Requirements for LLCs

Written by JoAnn Smith on December 19th, 2011. Posted in California, Surety Bond Blog

Beginning January 1, 2012, the California State License Board (CSLB) will be authorized to issue Contractors License Bonds to limited liability companies (LLCs). This authorization is courtesy of Senate Bill 392. As part of the application requirements for LLCs, a $100,000 surety bond will be required for the “issuance, reissuance, reinstatement, reactivation, and renewal of an LLC license for the benefit of any employee or worker damaged by the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as other contributions (not required for inactive LLC licenses),” according to the CSLB website. It is important to note that this $100,000 surety bond is in addition to the standard $12,500 California contractors license bond requirement. Most other requirements and provisions that apply to corporate licenses will also apply to LLC licenses.

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West Virginia Introduces Performance Bond Requirement For Marcellus Shale Drillers

Written by JoAnn Smith on December 15th, 2011. Posted in Surety Bond Blog, West Virginia

Shale Drilling Performance BondLawmakers in W. VA. have moved closer this week to overhauling regulation of shale gas drilling in the Marcellus shale deposit field. A new bill passed by the state Senate to the House contains similar requirements as an interim bill that was passed earlier this year, and it outlines a plan for a shale drilling industry that has been working under conventional drilling regulations and the interim bill. Of interest to the surety bond professionals is the requirement that drillers will be required to produce a $50,000 performance bond to meet compliance with the new regulations. If there are multiple wells drilled, a $250,000 blanket surety bond may be obtained to meet the surety bond requlations. What is Marcellus Shale? The Marcellus Shale is a black, low density, carbonaceous (organic rich) shale that occurs in the subsurface a mile or more below much of Ohio, West Virginia, Pennsylvania and New York. Also known as the Marcellus Formation, it also runs deep under some small sections of Maryland, Kentucky, Tennessee, and Virginia. It has been estimated that the Marcellus might actually contain more than 500 trillion cubic feet of natural gas, and that as much as 10% of that, or 50 trillion cubic feet, could be harnessed. That much natural gas could potentially supply the entire United States with natural gas for up to two years and be worth upwards of $1 trillion. Read more about Marcellus shale:, Read more about the West Virginia bill here: The State Journal Shale Gas Primer – U.S. Department of Energy (DOWNLOAD PDF)

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Louisiana Revises Performance Bond Requirements for House Lifting Projects

Written by Surety Bond Expert on December 12th, 2011. Posted in Lousiana, Surety Bond Blog

Louisiana Performance Bonds On November 1, 2011, the State of Louisiana began requiring contractors that were receiving grants from the state’s Hazard Mitigation Grant Program to obtain a performance surety bond in order to be eligible for grant money. This requirement came about because many small contractors were collecting an 80% advance payment on a grant, then bailing out of the project without completing it. To combat this, State Senator Julie Quinn (R-Metairie), who also works as legal counsel and COO of Orleans Shoring, a large elevation company with direct interests in the grant projects, put pressure on the state to institute surety bond requirements for the grant projects. Unfortunately, many legitimate small contractors were immediately affected because they found it difficult to qualify for the performance bond as required by the new policy. So several weeks ago, the state revised the policy to allow small contractors to continue to participate in the grant program, but with strings attached. Although contractors that can prove they can’t get a surety bond (performance bond) for a project won’t be eligible to collect the 80 percent up-front grant money, they CAN collect 25 percent and receive additional payments as they progress along the project timeline, so long as the homeowner agrees to waive the performance bond requirement. Source: The Times-Picayune (

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