Motor Vehicle Dealer Bond in California

What this bond requires in California

California requires every licensed vehicle dealer to file a surety bond with the DMV under Cal. Veh. Code § 11710(b), which sets the standard amount at $50,000. Dealers who deal exclusively in motorcycles or all-terrain vehicles post a reduced $10,000 bond under the same section. Per Cal. Veh. Code § 11710.1, wholesale-only dealers selling fewer than 25 vehicles per year also qualify for the reduced $10,000 amount. The bond protects purchasers, sellers, financing agencies, and governmental agencies from fraud or violations of the conditions in § 11711.

Who requires it

The motor vehicle dealer bond is required by the California Department of Motor Vehicles, Occupational Licensing Branch under California Vehicle Code § 11710 (and § 11710.1).

How to file in California

Dealers file the surety bond with the California DMV Occupational Licensing Branch as part of the dealer license application or renewal. The bond is issued on DMV Form OL 25 (standard $50,000 dealer bond) or OL 25B (for motorcycle, ATV, or qualifying wholesale-only dealers at $10,000), signed by an admitted surety insurer authorized to transact business in California with the surety's signature notarized, and submitted alongside the rest of the dealer application package to DMV Occupational Licensing.

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FAQ

Common questions

Is a motor vehicle dealer bond required in California?

Yes. California requires motor vehicle dealer bonds issued by an admitted surety. The required amount is $10,000 to $50,000.

How much is the bond in California?

The bond amount is $10,000 to $50,000. Your annual premium is a small percentage of that, based on credit and experience.

Who requires the bond?

The bond is required by the California Department of Motor Vehicles, Occupational Licensing Branch.

How is the bond filed?

Dealers file the surety bond with the California DMV Occupational Licensing Branch as part of the dealer license application or renewal. The bond is issued on DMV Form OL 25 (standard $50,000 dealer bond) or OL 25B (for motorcycle, ATV, or qualifying wholesale-only dealers at $10,000), signed by an admitted surety insurer authorized to transact business in California with the surety's signature notarized, and submitted alongside the rest of the dealer application package to DMV Occupational Licensing.

What does the bond cover?

Surety bonds protect the obligee, not the principal. If you fail to meet the obligation the bond guarantees, the surety pays the claim and recovers from you.

Is a surety bond the same as insurance?

No. Insurance protects you. A surety bond protects whoever required the bond. You repay the surety for any claim they pay.