Iowa Auto Dealer Bond and Dealer License

If your bond is canceled

Your bond must include a provision requiring notice to the Motor Vehicle Division at least 30 days before cancellation. If the bond is canceled, the department cancels your dealer license, and the cancellation takes effect the same date the bond is canceled. If the bond is reinstated or a new bond is issued, the department will immediately rescind the revocation of your license. Evidence of the bond is kept on file with the Motor Vehicle Division, and you keep the original surety bond with your business records.

The license, forms, and documents

The licensing agency is the Iowa Department of Transportation, Motor Vehicle Division, under Iowa Code chapter 322 and rule 761 IAC chapter 425. You apply for a motor vehicle or towable recreational vehicle dealer license on Form 411008. The bond is submitted on Iowa DOT Form 417064, "Bond for Motor Vehicle Dealer and/or Towable Recreational Vehicle Dealer". The Iowa DOT lists the $75,000 surety bond among the items you send in for a motor vehicle dealer license, and notes it can be obtained through your insurance agent or an Iowa-licensed bonding company. Your application also requires liability insurance with limits of at least $100,000 / $300,000 / $50,000. An applicant for a used motor vehicle dealer license must first complete a minimum of eight hours of prelicensing education. A person selling more than six motor vehicles in a twelve-month period may be presumed to be engaged in the business and required to be licensed; banks and credit unions are exempt. When reviewing an application, the department may withhold the granting of a license for a period not exceeding thirty days.

Your place of business

Your place of business includes an office with a business-use phone, staffed a minimum of 32 hours, Monday through Friday; motorcycle-only dealers are not held to those hours. It also needs a repair facility with the space, access, equipment, and tools to repair and recondition the vehicles you sell, and display space at the principal place of business: in a building for new motor vehicle dealers, or in a building or an all-weather outside area for used dealers. A restricted dealer — such as a leasing-option-only, repossessed-only, fleet, or auction-only dealer — must have a business location in Iowa but not a full place of business, and does not receive dealer plates.

Steps

1. Check if you need a license. Selling more than six motor vehicles in a twelve-month period may be presumed to be engaging in the business; banks and credit unions are exempt.
2. Set up your place of business. Keep an office with a business-use phone, staffed at least 32 hours, Monday through Friday (motorcycle-only dealers excepted), plus a repair facility and display space.
3. Finish prelicensing education. If you are applying as a used motor vehicle dealer, complete a minimum of eight hours of prelicensing education first.
4. Obtain the $75,000 surety bond (motor vehicle and towable RV dealer licenses). Get it through your insurance agent or an Iowa-licensed bonding company on Form 417064, and make sure it includes the 30-day cancellation-notice provision.
5. Arrange liability insurance. Carry limits of at least $100,000 / $300,000 / $50,000.
6. File your application with the Iowa DOT. Submit Form 411008; the bond must be filed before the license is issued, and the department may withhold the license up to thirty days during review.

Sources

• Iowa Legislature: Iowa Code § 322.4
• Iowa Legislature: Iowa Code § 322.5
• Iowa Legislature: Iowa Code § 322.7A
• Iowa Legislature: Iowa Code § 322C.4
• Iowa Legislature: 761 IAC chapter 425
• Iowa DOT: Get a Motor Vehicle Dealer's License
• Iowa DOT: Dealer license renewal notice
• Iowa DOT: Bond Form 417064

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