Effective September 1, 2021, all Independent Motor Vehicle Dealers in Texas holding a General Distinguishing Number (GDN) will be required to obtain a $50,000 bond. The bond limit, according to the Texas Transportation Code Chapter 503, has increased from the previously required $25,000 bond. Those who are up for renewal or are applying for a new GDN before September 1st, 2021, can apply for the original $25,000 surety bond and will still meet the security requirements. Any new applications or renewals started on or after September 1st, will be required to apply for the increased surety bond amount of $50,000.
Who Does This Impact?
This increased surety bond requirement applies to any and all GDN license types except for Trailer/Semitrailer and Non-Motorized Travel Trailers. It does not, however, apply to franchised dealers who have been issued a GDN license associated with a franchise dealer.
What Caused a need to Increase the Bond Amount for Texas Motor Vehicle Dealers?
According to the Texas Department of Motor Vehicles, there has been an ongoing issue of misuse with temporary registration tags. With the current regulations set in place, there were few repercussions for those who chose to abuse the temporary tag system. The goal for the increase in the security surety bond for motor vehicle dealers in Texas is to establish financial security for consumers who are negatively affected by the misuse of temporary tags on behalf of the dealer.
Additional Information Regarding Texas MVD Bond Requirements
The new law also requires that motor vehicle dealers in Texas post notice of the surety bond along with the process for which a consumer can make a claim against the bond if they feel as though the dealer has not followed all laws and regulations that accompany the bond requirements.
For more information refer to Texas Administrative Code §215.137 for a complete list of surety bond requirements and Transportation Code §503.033 for a complete list of security requirements for motor vehicle dealers in the state.
Need to Renew Your Bond?
Connect with Bonding Solutions today to learn more about the bond increase, renew your MVD bond, or apply for a new one. Bonding Solutions is the leading surety agency nationwide for Motor Vehicle Dealer Bonds. We provide fast approval and affordable rates while making the entire application process as simple as possible. You can connect with a team member directly by click HERE or you can start your online application instantly HERE!