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Why is a Massachusetts Motor Vehicle Dealer Bond Required?
The surety bond protects any person who purchases a vehicle from a licensee, and who suffers a loss on account of the following:
- dealer’s default or nonpayment of valid bank drafts, including checks drawn by the dealer for the purchase of motor vehicles;
- dealer’s failure to deliver, in conjunction with the sale of a motor vehicle, a valid motor vehicle title certificate free and clear of any prior owner’s interests and all liens except a lien created by or expressly assumed in writing by the buyer of the vehicle;
- the fact that the motor vehicle purchased from the dealer was a stolen vehicle;
- the dealer’s failure to disclose the vehicle’s actual mileage at the time of sale;
- the dealer’s unfair and deceptive acts or practices, misrepresentations, failure to disclose material facts or failure to honor a warranty claim or arbitration order in a retail transaction; or
- the dealer’s failure to pay off a lien on a vehicle traded in as part of a transaction to purchase a vehicle when the dealer had assumed the obligation to pay off the lien.
- Recovery against the bond or its equivalent may be made by any person who obtains a final judgment in a court of competent jurisdiction against the dealer for an act or omission on which the bond is conditioned if the act or omission occurred during the term of the bond.
The surety company is not be liable for total claims in excess of the bond amount, regardless of the number of claims made against the bond or the number of years the bond remained in force. The bond may be canceled by the surety company at any time by providing 30 days advance written notice.
Motor Vehicle Dealer Bonds And Getting Your Massachusetts Business License/Registration
Automobile dealer licenses in Massachusetts are issued by local city and town jurisdictions rather than through a statewide vehicle commission. A separate surety bond is required for each different name under which the dealer conducts business and for each city or town in which the dealer has a place of business. For more information, applicants should contact their local government office.