Kansas Auto Dealer License and $50,000 Dealer Bond

The $50,000 bond and who it protects

Kansas law requires every applicant or licensee who is or applies to be a used vehicle dealer or a new vehicle dealer to furnish and maintain a bond, and the amount of that bond is $50,000. It is a corporate surety bond from a company authorized to do business in Kansas, executed in the name of the State of Kansas for the benefit of any aggrieved retail or wholesale buyer or seller of a vehicle. The bond is security for your compliance with the dealer statutes and indemnity for any loss a buyer or seller suffers from an act that is grounds to suspend or revoke your license. The surety's total liability for all breaches can never exceed the bond amount.

Instead of a surety bond, you may satisfy the requirement by depositing cash, negotiable United States or Kansas bonds, or negotiable bank certificates of deposit of not less than $50,000 with the State Treasurer. The $50,000 figure is mandatory for new and used vehicle dealers; for other licensees, the director may require a bond of $5,000 to $20,000 only when there is reasonable cause to doubt their financial responsibility or compliance. The Division's own tips sheet, form D-17a, instead states a $50,000 bond for all license types except manufacturers, distributors, factory branches, lending agencies and manufactured home dealers. Because the statute and the Division's form describe this differently, confirm which bond your license type needs with the Division before you apply.

The statute's bonding requirements do not apply to first or second stage manufacturers, factory branches, factory representatives or salespersons. Form D-30 is the bond written for $50,000. Some older Division documents still list $30,000: form D-20B is written in the sum of thirty thousand dollars, and the 2018 dealer handbook lists a $30,000 bond on form D-20 for certain license types. Both D-20B and D-30 still appear on the Division's forms page, so use the form the Division directs for your application.

Getting your Kansas dealer license

Dealer licenses in Kansas are issued by the Kansas Department of Revenue, Dealer Licensing. No vehicle dealer may engage in business in this state without obtaining a license. You need a license if you buy a vehicle intending to sell it for a profit, or you sell 5 or more vehicles within a calendar year; selling your own vehicle as an isolated and occasional sale does not require one.

The Division's application asks you to have an established place of business, pass a Kansas tax clearance check, provide three credit references, carry insurance on your place of business and all inventory, and obtain and maintain a surety bond. Public liability and property damage insurance is mandatory. When the bond is written, the bond entity must match the application entity, and a rider is only accepted against a bond already on file. If you file as a corporation, the bond should be written in the corporate name only. After you apply, the Division asks you to allow 6 to 8 weeks for processing, and you are scheduled for dealer training when the license is ready to be issued. You mail the original signed D-30 to the Division's Dealer Licensing Bureau.

Your place of business

You must maintain an established place of business that the division has inspected and accepted. Every vehicle dealer must display a sign with durable lettering at least 10 inches in height, easily visible from the street, identifying the established place of business. Your location must meet local zoning, and you must carry insurance on the premises and on all inventory. If you run a second lot, a supplemental location carries a $35 fee. The D-30 bond extends to additional locations or changes of address of the principal, and to a change of business name where ownership does not change, without separate notice to the surety.

Frequently asked questions

See neighboring states' dealer bonds: Missouri, Oklahoma, Colorado and Nebraska.