Virginia Code 46.2-1527.2: Bonding requirements for applicants for an original license
Before the Board shall issue to an applicant an original license, the applicant shall obtain and file with the Board a bond in the amount of $50,000. The bond shall come from a corporate surety licensed to do business in the Commonwealth and approved by the Attorney General. The bond shall be conditioned on a statement by the applicant that the applicant will not practice fraud, make any fraudulent representation, or violate any provision of this chapter in the conduct of the applicant’s business. The Board may, without holding a hearing, suspend the dealer’s license during the period that the dealer does not have a sufficient bond on file.
Terms Used In Virginia Code 46.2-1527.2
- Board: means the Motor Vehicle Dealer Board. See Virginia Code 46.2-1500
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Fraud: Intentional deception resulting in injury to another.
- Fund: means the Motor Vehicle Dealer Board Fund. See Virginia Code 46.2-1500
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Original license: means a motor vehicle dealer license issued to an applicant who has never been licensed as a motor vehicle dealer in Virginia or whose Virginia motor vehicle dealer license has been expired for more than 30 days. See Virginia Code 46.2-1500
- Person: includes any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or any other legal or commercial entity and any successor, representative, agent, agency, or instrumentality thereof. See Virginia Code 1-230
- salesperson: means (i) any person who is hired as an employee by a motor vehicle dealer to sell or exchange motor vehicles and who receives or expects to receive a commission, fee, or any other consideration from the dealer; (ii) any person who supervises salespersons employed by a motor vehicle dealer, whether compensated by salary or by commission; (iii) any person, compensated by salary or commission by a motor vehicle dealer, who negotiates with or induces a customer to enter into a security agreement on behalf of a dealer; or (iv) any person who is licensed as a motor vehicle dealer and who sells or exchanges motor vehicles. See Virginia Code 46.2-1500
- Vehicle: means every device in, on or by which any person or property is or may be transported or drawn on a highway, except personal delivery devices and devices moved by human power or used exclusively on stationary rails or tracks. See Virginia Code 46.2-100
If a person suffers any of the following: (i) loss or damage in connection with the purchase or lease of a motor vehicle by reason of fraud practiced on him or fraudulent representation made to him by a licensed motor vehicle dealer or one of the dealer’s salespersons acting within his scope of employment, (ii) loss or damage by reason of the violation by a dealer or salesperson of any provision of this chapter in connection with the purchase or lease of a motor vehicle, or (iii) loss or damage resulting from a breach of an extended service contract as defined by § 59.1-435 entered into on or after April 8, 1994, that person shall have a claim against the dealer and the dealer’s bond, and may recover such damages as may be awarded to such person by final judgment of a court of competent jurisdiction against the dealer as a proximate result of such loss or damage up to but not exceeding $25,000, from such surety, who shall be subrogated to the rights of such person against the dealer or salesperson. The liability of such surety shall be limited to actual damages and attorney fees and shall not include any punitive damages assessed against the dealer or salesperson. On January 1 of each year, the amount that may be awarded against such bond to any person as a result of loss or damage to that person as provided in this section shall be increased by the percentage increase over the most recently available unadjusted 12-month period in the Consumer Price Index for used motor vehicles, as published by the U.S. Bureau of Labor Statistics or any successor index. In the event that this index decreases over any such 12-month period, there shall be no change in the amount that may be awarded.
In those cases in which a dealer’s surety shall be liable pursuant to this section, the surety shall be liable only for the first $50,000 in claims against the dealer. Thereafter, the Fund shall be liable for amounts in excess of the bond up to the amount that may be paid out of the Fund, less the amount of the bond, in those cases in which the Fund itself may be liable. 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 dealer’s surety shall notify the Board when a claim is made against a dealer’s bond, when a claim is paid and when the bond is cancelled. Such notification shall include the amount of a claim and the circumstances surrounding the claim. Notification of cancellation shall include the effective date and reason for cancellation. The bond may be cancelled as to future liability by the dealer’s surety upon 30 days’ notice to the Board.
1994, c. 478; 1995, cc. 767, 816; 1998, c. 325; 2001, c. 194; 2006, c. 172; 2011, c. 407; 2012, cc. 10, 119; 2015, c. 615.