Like most states, Kansas requires motor vehicle dealers to be licensed and maintain an active Motor Vehicle Dealer License Bond. Kansas statute 8-2404 (a) says, “No vehicle dealer shall engage in business in this state without obtaining a license as required by this act.” One of the requirements to get and maintain an active dealer license is that the dealer must obtain a valid Motor Vehicle Dealer Bond. The bond protects the general public by ensuring that the Kansas Motor Vehicle Dealer will comply with the provisions for dealers set by the state. The Motor Vehicle Dealer bond provides indemnity available to someone who has been harmed because of improper actions by the dealer and violations of K. S. A. 8-2401 et seq. These bonds can purchase instantly below:
What is the Amount of the Kansas Motor Vehicle Dealer Bond?
Kansas Requires the Motor Vehicle Dealer Bond to be in the amount of $30,000 and the Obligee on the bond should be the Kansas Department of Revenue. The Dealer is the Principle on the bond and the Surety is the bond company that is guaranteeing the obligation.
Who Needs a Motor Vehicle Dealer Bond and License in Kansas?
Kansas defines a vehicle dealer as “a person who purchases a vehicle with the intent to sell for a profit or sells 5 or more vehicles within a calendar year.” Doing business as a vehicle, manufactured home dealer or salesperson in the state of Kansas requires a license issued by Kansas Department of Revenue, Dealer Licensing.
Bonding requirements shall not apply to first or second stage manufacturers, factory branches, factory representatives or salespersons. These parties may be required to provide other surety bonds to the state as well as have additional licensing requirements.
How to Obtain a Kansas Motor Vehicle Dealer Bond
MG Surety can issue these bonds instantly. Simply click below and enter your information. You will have the option to purchase your bond instantly. We also represent many other surety bond companies that write these motor vehicle dealer bonds freely with a credit check. Some surety bond companies prefer New Vehicle Dealers to Used Vehicle Dealers. The reason is that there tends to be more claims against Used Vehicle Dealers. Fortunately, these bonds should still be easy to obtain for most Used Vehicle Dealers.
What About Bad Credit?
These surety bonds are obtainable in almost all circumstances. We represent most major surety bond markets and can usually find a way to help all parties.
Term of the Kansas Motor Vehicle Dealer Bond
The Kansas Motor Vehicle Bond is continuous. That means the bond will renew every year while the dealer’s license is active. The bond can be cancelled by the surety upon providing thirty (30) days written notice to the Principle and the Obligee. If the surety cancels, the Dealer will need to replace the bond to keep their state license in good standing.
Cost of Kansas Motor Vehicle Dealer Bonds
The cost of the bond depends on the applicant. Most applicants will pay about 1% of the bond amount or $300 per year. Keep in mind that these Motor Vehicle Dealer Bonds need to be renewed every year and a new bond premium will be due at every renewal. Most surety bond companies will give discounts for purchasing additional years in advance. For example, a two-year bond will only cost $525 with some surety bond companies and larger discounts are available for longer terms.
Who Can Make a Claim on the Bond?
The bond form reads,
“bond exists as indemnity for any loss sustained by a retail or wholesale buyer or seller of a vehicle by reason of any act by the licensee constituting grounds of suspension or revocation of license, in accordance with and under authority of K. S. A. 8-2401 et seq.”
In general, almost anyone who has been affected by the dealer’s actions that could cause their licensed to be suspended or revoked, could file a claim against the Kansas Motor Vehicle Dealer Bond. Additionally, the state gives guidance on how these surety bond claims should be processed under section 8-2404,
“Upon determination by the director that a judgment from a Kansas court of competent jurisdiction is a final judgment and that the judgment resulted from an act in violation of this act or would constitute grounds for suspension, revocation, refusal to renew a license or administrative fine pursuant to K.S.A. 8-2411, and amendments thereto, the proceeds of the bond on deposit or in lieu of bond provided by subsection (j), shall be paid. The determination by the director under this subsection is hereby specifically exempted from the Kansas administrative procedure act and the Kansas judicial review act. Any proceeding to enforce payment against a surety following a determination by the director shall be prosecuted by the judgment creditor named in the final judgment sought to be enforced. Upon a finding by the court in such enforcement proceeding that a surety has wrongfully failed or refused to pay, the court shall award reasonable attorney fees to the judgment creditor.”
Alternatives to Kansas Motor Vehicle Dealer Bonds
The state of Kansas does let dealers choose from a couple of alternatives. These can be cash, Certificates of Deposits, U.S. Bonds or State of Kansas Bonds. For most people, surety bonds are the better option. Surety bond companies must investigate before paying claims to make sure they have merit. No such defense exists if other options are posted. Further, a dealer’s money may be needed in other areas and these Motor Vehicle Dealer Bonds are considered unsecured credit.
Other Kansas Motor Vehicle Dealer Bond Requirements
The entity on the surety bond must match the entity on the license application to the state.
If the applicant is a Sole Proprietor, the individual’s name should be listed next to the business name DBAS as follows: Bill Sample dba Bill’s Cars. The owner must sign the bond.
If the entity is a partnership, all partners must be listed on the bond. An example would be as follows: Bill and Nancy Sample dba Bill’s Cars. Only one owner in a partnership needs to sign the bond.
If the dealer is a Kansas corporation, the DBA is optional, but the corporation must be listed on the bond. An example would be as follows: Bill’s Cars Inc. The President of the corporation must sign the bond and another corporate officer needs to “Attest” the bond.
The business address on the dealer’s application must match the business address on the surety bond. For out of state corporations, the Kansas location must be listed on the bond. Additionally, if a corporation is register in a state outside of Kansas, they need to register as a foreign corporation in Kansas. The bond will then need to be accompanied by the foreign corporation paperwork.
Indemnity Will Be Required
To obtain a Kansas Motor Vehicle Dealer Bond, the Dealer will be required to sign an indemnity agreement. That means that if the surety bond company suffers a valid loss, they will seek reimbursement from the Dealer. More can be read about indemnity here.
It is important for all Kansas Dealers to maintain an active license and a Motor Vehicle Dealer Bond. These surety bonds are easily obtainable and can be purchased instantly by most applicants. However, contact MG Surety Bonds anytime with questions. Our surety bond experts are standing by and ready to assist. You may also visit our FAQ Page on Surety Bonds. Kansas Dealers may need additional surety bonds as well. We write all major surety bonds and many other Kansas surety bonds can be purchase instantly here.