Unless give a “license fee and waiver” each dealer applicant must post a Virginia motor vehicle dealer bond with the Commonwealth before be issued a license to operate.  The Code of Virginia §46.2-1500 defines a “dealer” as any person who:

1. For commission, money, or other thing of value, buys, sells, exchanges, either outright or on conditional sale, bailment lease, chattel mortgage, or otherwise or arranges or offers or attempts to solicit or negotiate on behalf of others a sale, purchase, or exchange of an interest in new motor vehicles, new and used motor vehicles, or used motor vehicles alone, whether or not the motor vehicles are owned by him; or

2. Is wholly or partly engaged in the business of selling new motor vehicles, new and used motor vehicles, or used motor vehicles only, whether or not the motor vehicles are owned by him; or

3. Offers to sell, sells, displays, or permits the display for sale, of five or more motor vehicles within any 12 consecutive months.

Partied fitting the above statutory definition most provide a Virginia motor vehicle dealer bond, complete the appropriate qualification course and follow the licensing protocols established by law and regulated by the Virginia Motor Vehicle Dealer Board.   Pursuant to the VA MVD Board’s general instructions, applicant must:

  • Satisfy all local zoning regulations in your chosen locality.
  • Have sales, service, and office space devoted exclusively to the dealership of at least 250 square feet in a permanent, enclosed building not used as a residence.
  • House all records the dealer is required to maintain by § 46.2-1529, Code of Virginia.
  • Equip the dealer office space with a desk, chairs, filing space, a working telephone listed in the name of the dealership, and working utilities including electricity and provisions for space heating.
  • Display business hours and a sign as required by § 46.2-1533 and § 46.2-1534, Code of Virginia, respectively. A dealer must be open a minimum of twenty hours per week, ten of which must be between 9 am to 5 pm, Monday through Friday.
  • Have contiguous space designated for the exclusive use of the dealer adequate to permit the display of at least ten vehicles.
  • Pass the required dealer test
  • Secure a $50,000 Virginia motor vehicle dealer bond.

The specific bond requirements for the Virginia dealer-operator are establish in Virginia Code §46.2-1527.2.  Before the Board shall issue to an applicant an original license, the applicant shall obtain and file with the Board a Virginia motor vehicle dealer bond. The Virginia surety bond shall come from a corporate surety licensed to do business in the Commonwealth. The surety bond must be conditioned on a statement by the applicant that the applicant will not practice fraud, make any fraudulent representation, or violate any provision of the Virginia vehicle dealer code in the conduct of the applicant’s business.  The Code is very fair to surety in that punitive damages in suits against the dealer cannot be collected from the Virginia motor vehicle dealer bond, and the obligation is not cumulative either on its face or by statute, to wit; “In those cases in which a dealer’s surety is liable, the surety will be liable only for the first $50,000 in claims against the dealer. Thereafter, the ‘VA MVD Recovery Fund’ will be liable for amounts in excess of the Virginia motor vehicle dealer bond up to the amount that may be paid out of the Fund.  The aggregate liability of the dealer’s surety to any and all persons, regardless of the number of claims made against the bond or the number of years the bond remains in force, shall in no event exceed $50,000″.  The bond is also cancelable upon thirty days notice to the Dealer Board.

Virginia surety leaderSurety One, Inc. offers motor vehicle dealer bonds in all states where they are required by law. Our special programs allow us to offer bonding support regardless of your credit condition. Need to know the bond requirements for dealers in any state?  Click here for our MVD bond guide.  We also offer certificate of title bonds and lien release bonds which are sometimes needed in the course of your dealership operations.  Visit us at SuretyOne.com, call (787) 333-0222 or (800) 373-2804, or email us at Underwriting@SuretyOne.com for a Virginia motor vehicle dealer bond application or for information on any surety need.