Utah Auto Dealer Bond

A Utah auto dealer bond, commonly called a Motor Vehicle Dealer Bond, is a corporate surety bond required by the Utah Motor Vehicle Enforcement Division before your dealership license can be issued.

It is a financial guarantee that your dealership will follow Utah motor vehicle law and deal honestly with customers. If you fail to do so, a harmed customer can make a claim against your bond to recover losses.

Unlike insurance, which protects you, a surety bond primarily protects your customers and the state. If a valid claim is paid out, you are responsible for reimbursing the surety company.

Every surety is a contract between 3 parties:
 

• The Obligee: Utah Motor Vehicle Enforcement Division, Utah State Tax Commission
  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 basic information about yourself, your business, the bond type, and the bond amount, 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 to 48 hours.

3. Purchase Your Bond

Once you receive your quote, you can pay the bond premium and you’re officially bonded in Utah. You’ll receive an email copy of the bond, and you can request a paper copy if necessary.

4. File Your Bond With MVED

Submit your bond as part of your dealer license application to the Utah Motor Vehicle Enforcement Division. 

Filing address:

Utah State Tax Commission

Motor Vehicle Enforcement Division

210 North 1950 West

Salt Lake City, UT 84134

Phone: 801-297-2600

For express mail, use ZIP code 84116.

The Utah Motor Vehicle Enforcement Division requires dealers, body shops, and crushers to file a corporate surety bond before receiving or maintaining a license.
 

• New and used motor vehicle dealers - A $75,000 bond is required for new or used motor vehicle dealers.
• Large trailer dealers - Large trailer dealers fall under the $75,000 bond requirement.
• Special equipment dealers - Utah Code lists the special equipment dealer bond requirement at $75,000.
• Motorcycle and OHV dealers - Motorcycle and off-highway vehicle dealers must carry a $10,000 bond.
• Small trailer dealers - Small trailer dealers must carry a $10,000 bond. Utah defines small trailers as trailers between 750 and 1,999 lbs. unladen weight.
• Vehicle crushers - Licensed crushers must carry a $10,000 bond.
• Body shops - Licensed body shops must carry a $20,000 bond.

The bond protects consumers from financial loss caused by dealer fraud, fraudulent representations, and certain title or lien violations. 

A claim can be filed for violations such as:
 

• Making fraudulent statements or misrepresentations during a vehicle sale
• Failing to submit or deliver a certificate of title or manufacturer’s certificate of origin
• Failing to pay off liens on motor vehicles traded in
• Selling or transferring vehicles in violation of the Utah Motor Vehicle Business Regulation Act
• Any other covered act that causes a valid financial loss under the bond

The maximum payout per bond is the bond’s penal sum, such as $75,000 for most Utah motor vehicle dealer licenses. After any payout, you as the principal are liable to reimburse the surety.

How the Claims Process Works?

• The claimant files a written complaint or claim as required under Utah law.
• The surety investigates the claim to determine whether it is valid.
• If the claim is valid, the surety pays eligible claimants up to the bond’s penal sum.
• Utah law includes timing and distribution rules when multiple claims are filed against the same bond.
• The dealer is then required to reimburse the surety for any amounts paid out.
• Claims on your record can significantly increase your bond premium at renewal.

Utah MVED licenses expire on June 30 each year, and your bond must remain active as long as your dealership is in business.

Lance Surety will contact you before your next premium due date to help prevent any lapse in coverage. To keep the bond active, you must pay the renewal premium when it comes due.

MVED does not send renewal notices by postal mail. Businesses that use the Motor Vehicle Portal may receive email reminders around April 1 each year. If you do not renew online, you can contact MVED after April 1 to request a renewal packet.

Utah dealer bonds may be continuous in form, meaning the bond can remain active as long as the premium is paid and the surety does not cancel it. You typically won’t need to file a new bond each year unless you change surety providers or your bond information changes.

If your bond lapses, you cannot legally operate as a dealer. Utah law states that a dealer, body shop, or crusher that loses possession of the required bond has its license automatically suspended until the required bond is on file and the license has been reinstated.

Getting a Utah auto dealer license is handled through the Utah Motor Vehicle Enforcement Division. MVED outlines the requirements for the place of business, sign, bond, application, fees, fingerprints, orientation, sales tax license, and inspection.

Key requirements include:
 

• A principal place of business in Utah that complies with zoning and is devoted to motor vehicle sales and related business.
• Enough display space for at least three vehicles and a permanent enclosed office for dealership records.
• A permanent sign of at least 24 square feet showing the dealership’s licensed name.
• A completed TC-301 Bonded Motor Vehicle Business Application.
• A corporate surety bond filed with MVED using Form TC-450.
• Photos of the place of business, sign, owners, partners, and corporate officers.
• Fingerprint cards and Form TC-465 fingerprint waivers for all required owners, partners, members, or corporate officers.
• Completion of the required eight-hour orientation course for new applicants and a three-hour training class each year for renewal.
• Proof of a valid Utah sales tax license for motor vehicle sales.
• A trade name filed with the Utah Department of Commerce.
• A manufacturer authorization letter if applying as a franchised new vehicle dealer.

Applications, the bond, photos, and fees must be submitted to MVED. After MVED receives the application, allow 5 to 10 working days for the on-site inspection of the place of business. The license cannot be issued until after the inspection.

For more information on how to get the license, check our guide: Utah auto dealer license

How long does it take to get a Utah dealer bond?

For most applicants, bonds are issued the same day, often within minutes of completing the application. Your bond is delivered digitally by email. If you need a paper copy, we can mail one to you.

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

The bond amount is the maximum protection available to claimants. For most Utah motor vehicle dealers, that amount is $75,000. This is not what you pay. The bond premium is the annual cost you pay to purchase the bond, usually a percentage of the bond amount.

What happens if my bond lapses?

If your bond lapses, you are no longer in compliance with Utah law and cannot legally operate as a dealer. Utah law states that losing possession of the required bond automatically suspends the license until the bond is on file and the license is reinstated.

Can my bond be cancelled?

Yes. A surety bond can be cancelled by the surety company or voluntarily replaced if you move to another surety provider. If your bond is cancelled or no longer on file, your dealer license is no longer compliant, so you should secure replacement coverage before any lapse occurs.

Do I need a bond for every salesperson I employ?

No. Utah does not require a separate salesperson bond like some other states do. Salespeople may need their own licenses, but the dealer bond requirement applies to the licensed dealer, body shop, crusher, or other bonded business type.

Do I need a separate bond for each dealership location?

Generally yes for additional licensed places of business. Utah’s licensing materials indicate that an additional used motor vehicle or large trailer location must meet the same place-of-business requirements and carry its own $75,000 bond. A used motorcycle or small trailer location generally requires a $10,000 bond for each location.