Texas Motor Vehicle Dealer Bond Limit Increases

For over 30 years, Independent Texas Motor Vehicle Dealers holding a General Distinguishing Number (GDN) have been required to maintain a $25,000 Auto Dealer Bond. House Bill 3533, passed on June 4, 2021, amends Texas Transportation Code Chapter 503 to include a bond limit increase, doubling the bond amount from $25,000 to $50,000.  

How Are Independent Dealers Affected?

Effective September 1, 2021, those applying for a new independent dealer license or renewing their current license, on or after this date, will need to secure a $50,000 Motor Vehicle Dealer’s Surety Bond. The bond is issued or renewed for a two-year period. 

The Texas Department of Motor Vehicles is mandated to update its website to include information on how consumers can file a claim on the dealer’s surety bond. At the time this article was posted no claim information was live at https://www.txdmv.gov/. Similarly, auto dealers are responsible for posting a visible notice alongside their license which provides information on the claims process.

Franchise dealers are not impacted by the passing of this bill.

Why Is the Limit Being Increased?

The Texas Department of Motor Vehicles held a board meeting discussing the issue of temporary tag abuse by independent dealers. Current regulations do not prevent misuse of the tag system, therefore the board feels that changes must be made to provide financial recourse. Dealers are still granted a specific number of temporary tags and may request more if necessary. 

The bond limit increase helps consumers negatively affected by temporary tag misuse and the financial issues associated if a dealer goes out of business.

Check out Jet’s Texas Motor Vehicle Dealer Bond page for more information.