North Dakota Motor Vehicle Dealer Bond

A North Dakota motor vehicle dealer bond is a continuous surety bond required by the North Dakota Department of Transportation Motor Vehicle Division before your dealer license can be issued. It is a financial guarantee that your dealership will follow North Dakota dealer laws and deal honestly with customers.

If a dealer fails to follow the law, a harmed customer or third party can make a claim against the bond to recover losses. Unlike insurance, which protects your business, a surety bond mainly protects consumers and the state. If a valid claim is paid, you are responsible for reimbursing the surety company.

Every surety is a contract between 3 parties:

• The Obligee: State of North Dakota / North Dakota Department of Transportation

The state authority that requires the bond as a condition of licensing. They set the bond amount and terms.

• The Principal: You, the dealer

You purchase the bond and are bound by its terms. If a valid claim is paid, you must reimburse the surety.

• The Surety: such as Lance Surety Bonds

We underwrite the bond and guarantee payment to claimants up to the bond amount if you default on your obligations.

1. Submit Your Bond Application

You can apply for your bond online. Just enter some basic information about yourself and your business, and you should be able to submit your application within a matter of minutes. If you have any questions, we are more than happy to assist you.

2. Get a Quote

At Lance Surety Bonds, we want to provide you with the best premium rate possible. For most applicants with a strong credit history, a quote is ready within minutes. More complex applications may take up to 24 hours.

3. Purchase Your Bond

Once you receive your quote, you can pay the bond premium and your bond is issued on the correct North Dakota form for your dealer license type. North Dakota requires an original bond with notarized signatures from both you and the surety, so we mail the signed original to you. We also email you a copy for your records.

4. File your bond with the Auto Industry Division 

Mail the bond with your dealer license application to the North Dakota Department of Transportation Motor Vehicle Division, Dealer Services. NDDOT requires the bond to be submitted with the application unless a bond for your dealership is already on file.

Filing address:

North Dakota Department of Transportation

Motor Vehicle Division, Dealer Services

608 E. Boulevard Ave.

Bismarck, ND 58505

Phone: 701-328-1285 

The North Dakota Department of Transportation requires the following dealer license types to post a surety bond before a license can be issued or maintained. Each license type has its own bond form.

• New motor vehicle dealers - A $25,000 bond is required. This license authorizes the sale of new motor vehicles you are franchised to sell, plus used motor vehicles, motor-powered recreational vehicles, unconventional vehicles, and trailers other than travel trailers.
• Used motor vehicle dealers - A $25,000 bond is required for dealers selling used motor vehicles.
• Trailer dealers - A $10,000 bond is required for licensed trailer dealers.
• Motor-powered recreational vehicle dealers - A $10,000 bond is required for MPR dealers selling vehicles such as motorcycles, ATVs, UTVs, snowmobiles, and unconventional vehicles.
• Mobile home and manufactured home dealers - A $50,000 bond is required for dealers selling mobile homes, manufactured homes, motor homes, and travel trailers.

Low-speed vehicle dealers are not required by North Dakota law to hold a dealer license, and no surety bond is required. A low-speed dealer may elect to be licensed in order to receive dealer plates.

The bond protects customers and other third parties from financial loss caused by a dealer failing to comply with North Dakota motor vehicle laws. A claim may involve issues such as:

• Failing to provide a proper and valid certificate of title
• Misrepresenting vehicle information or transaction documents
• Failing to comply with applicable North Dakota dealer laws under Title 39
• Causing a financial loss to someone dealing or transacting business with the dealer

The maximum payout is limited to the bond amount for that license type.  After a valid claim is paid, the dealer is responsible for reimbursing the surety company.

How the Claims Process Works?

1. The consumer or claimant contacts the surety company directly to file a claim.
2. The surety investigates the claim to determine whether it is valid.
3. If the claim is valid, the surety may pay the claimant up to the bond amount.
4. The dealer must reimburse the surety for any amount paid on the claim.
5. A paid claim can make future bond renewals more expensive

North Dakota dealer licenses expire on December 31 each year, and your bond must stay active for your dealer license to remain in good standing. The bond itself is continuous, but the premium is renewed annually.

Lance Surety will contact you before renewal so you can avoid a lapse in coverage. If the bond is cancelled or changed, the Motor Vehicle Division must be notified. If a required bond is cancelled and no replacement bond is filed, the dealer license may be suspended.

North Dakota charges a $100 late fee if the renewal application is not postmarked on or before December 31. New and used motor vehicle dealers should also note that MVD will not renew a license if the dealership made fewer than eight retail motor vehicle sales during the previous year (NDCC 39-22-18). Maintaining strong credit can help keep your premium lower at renewal.

Getting a North Dakota motor vehicle dealer license requires submitting your dealer application and supporting documents to the North Dakota Department of Transportation. The NDDOT notes that applicants should allow four to six weeks for inspection before license issuance.

When applying for a dealer license with the North Dakota Department of Transportation, you should be prepared to submit the following:

•  Dealer application
•  Surety bond or the correct bond form for your dealer license type
• Approved business location with signage and a business phone number
• Dealer plate information
• Proof of liability insurance
• Application and site inspection fees 

For more information on how to get the license, check our guide: North Dakota dealer license.

How long does it take to get a North Dakota dealer bond?

For most applicants, bonds can be issued the same day, often shortly after the application is submitted. Your bond is delivered digitally by email. The state licensing process may take longer because NDDOT advises applicants to allow 4-6 weeks for inspection before the license is issued.

What is the difference between the bond amount and the bond premium?

The bond amount is the maximum protection available to claimants. For most North Dakota motor vehicle dealers, that amount is $25,000. This is not what you pay. The bond premium is the annual cost you pay to purchase the bond, usually a percentage of the required bond amount.

What happens if my bond lapses?

If your bond lapses, you are no longer in compliance with North Dakota dealer bond requirements, and your dealer license may be suspended. You should renew your bond before it expires and file a replacement bond before any cancellation takes effect.

Can my bond be cancelled?

Yes. A surety bond can be cancelled by the surety by giving 30 days' written notice by certified mail to you and the North Dakota Department of Transportation. If you still need your dealer license, you must file a replacement bond before the cancellation date.

Do I need a bond for every salesperson I employ?

No separate salesperson surety bond is listed for North Dakota dealer licensing. The bond requirement applies to the licensed dealer business and depends on the dealer license type.

Do I need a separate bond for each dealership location?

No, not for each lot. The bond applies to your dealer license, not to your locations. Motor vehicle dealers may operate secondary lots within five miles of the established place of business, identified with a sign showing the licensed dealer's name and telephone number, and those lots do not require an additional bond. You do need a separate bond for each license type you hold. 

For example, a dealer licensed for both used motor vehicles and mobile homes files a $25,000 bond and a $50,000 bond. A separate dealership that requires its own license, including a location outside the five-mile radius, needs its own bond as well.