Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your Ohio motor vehicle dealer bond needs.
What Are They?
Ohio enacted new legislation that went into effect at the end of January 2018. It allows retail customers who have incurred a financial loss due to certain statutory violations committed by licensed used motor vehicle dealers to have their transactions canceled by the Attorney General’s office. They will also receive compensation from the state’s Title Defect Rescission Fund. The purpose of an Ohio motor vehicle dealer bond is to ensure that the offending dealer replenishes funds dispersed to compensate consumers in such cases.
Therefore, an Ohio motor vehicle bond provides financial protection for both the state of Ohio and the consumer. The bonding requirement also is intended to deter dealers from unlawful or unethical sales practices concerning the titling of the used vehicles they sell.
Who Needs Them?
Only dealers selling used vehicles, manufactured homes, or mobile homes must purchase a $25,000 Ohio motor vehicle dealer bond as a prerequisite for obtaining or renewing a license to operate a dealership within the state. Dealers who were licensed before 01/27/2018 to sell used vehicles and dealers who are properly licensed to sell both new and used vehicles are exempt from the bonding requirement.
Failure to maintain a valid bond can result in suspension or revocation of the dealer’s license.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
There are three parties to every surety bond agreement:
- The Ohio Bureau of Motor Vehicles, Dealer Licensing is “the obligee.”
- The motor vehicle dealer is “the principal.”
- The surety bonding company is “the surety.”
The surety bond agreement obligates the principal to abide by applicable portions of Chapter 4517 of the Ohio Revised Code. Infractions leading to compensation of consumers from the Title Defect Rescission Fund include:
- The dealer’s failure to provide a title in a retail purchaser’s name
- The dealer’s failure to disclose in writing prior to the purchase that the vehicle is, according to its title, a rebuilt salvage vehicle
- The dealer’s failure to disclose to a retail purchaser in the written purchase agreement that the vehicle is titled as a buyback vehicle
- An odometer disclosure to a retail purchaser that doesn’t match the odometer reading on the vehicle’s title
After compensating a retail customer for a loss due to such a violation, the obligee will file a claim against the principal’s Ohio motor vehicle dealer bond in an amount up to the bond’s $25,000 “penal sum.” Typically, the surety will go ahead and pay that claim on behalf of the principal, creating a debt that the principal must subsequently repay to the surety. The legal responsibility for paying claims rests entirely with the principal.
What Do They Cost?
The premium for an Ohio motor vehicle dealer bond is a small percentage of the bond’s required $25,000 penal sum. Because the surety’s main concern is being reimbursed for claims paid on behalf of the principal, the primary consideration in setting the premium rate is the principal’s personal credit score, which is the best indicator of creditworthiness.
With excellent credit, the premium rate could be as low as 1% of the $25,000 penal sum, for a premium of $250.
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Our surety bond professionals will get you the Ohio motor vehicle dealer bond you need at a competitive rate.