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3
41-3-205
0
Motor Vehicle Dealer Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Tiara Auxier
Senate Sponsor:
LONG TITLE
General Description:
This bill raises the bond amount required for a used motor vehicle dealer license.
Highlighted Provisions:
This bill:
raises the required bond amount for a used motor vehicle dealer's license to $200,000; and
makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
41-3-205
, as last amended by Laws of Utah 2010, Chapter 342
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
41-3-205
is amended to read:
41-3-205
. Licenses -- Bonds required -- Maximum liability -- Action against
surety -- Loss of bond.
(1)
(a)
Before
a
the division may issue a
dealer's, special equipment dealer's, crusher's,
or body shop's license
is issued
, the applicant shall file
with the administrator
a
corporate surety bond
with the administrator
in the amount of:
(i)
$50,000 until June 30, 2006, and $75,000 on or after July 1, 2006,
$75,000
for a
new
motor vehicle dealer's license
as described in Section
41-3-202
;
(ii)
$200,000 for a used motor vehicle dealer's license as described in Section
41-3-202
;
(ii)
(iii)
$20,000 until June 30, 2006, and $75,000 on or after July 1, 2006,
$75,000
for a special equipment dealer's license;
(iii)
(iv)
$10,000 for a motorcycle, off-highway vehicle, or small trailer dealer's or
crusher's license; or
(iv)
(v)
$20,000 for a body shop's license.
(b)
The
applicant shall obtain a bond from a
corporate surety
shall be
that:
(i)
is
licensed to do business within the state
;
and
(ii)
have
holds
a rating of at least B+ by the A.M. Best Company.
(c)
The form of the bond:
(i)
shall be approved by the attorney general;
(ii)
shall be conditioned upon the
applicant's conducting business as a dealer
without:
(A)
fraud;
(B)
fraudulent representation;
(C)
violating Subsection
41-3-301(1)
which requires a dealer to submit or deliver
a certificate of title or manufacturer's certificate of origin; or
(D)
violating Subsection
41-3-402(1)
which requires payoff of liens on motor
vehicles traded in; and
(iii)
may be continuous in form.
(d)
The attorney general shall approve the form of the bond, which is conditioned on the
applicant conducting business as a dealer without:
(i)
fraud or fraudulent representation;
(ii)
violating Subsection
41-3-301(1)
regarding the delivery of a certificate of title or
origin; or
(iii)
violating Subsection
41-3-402(1)
regarding the payoff of liens on traded-in
motor vehicles.
(e)
The form of the bond may be continuous.
(d)
(f)
The total aggregate liability on the bond to all persons making claims, regardless
of the number of claimants or the number of years a bond remains in force, may not
exceed the
amount of the bond
bond amount
.
(2)
(a)
A cause of action under Subsection
(1)
may not be maintained against a surety
unless:
(i)
a claim is filed in writing with the administrator within one year after the cause of
action arose; and
(ii)
the action is commenced within two years after the claim was filed with the
administrator.
(b)
The surety or principal shall notify the administrator if a claim on the bond is
successfully prosecuted or settled against the surety or principal.
(2)
(a)
A claimant may not maintain a cause of action against a surety unless the claimant:
(i)
files a written claim with the administrator within one year after the day on which
the cause of action arises; and
(ii)
commences the action within two years after the day on which the claimant filed
the claim with the administrator.
(b)
The surety or principal shall notify the administrator if a person successfully
prosecutes or settles a claim on the bond against the surety or principal.
(3)
(a)
A surety or principal may not
make a payment
pay
on a surety bond to any
claimant until six months
have expired from
after
the date
when
on which
the first
written
claim on the bond was filed with the surety or principal
in writing
.
(b)
After
The surety or principal, after
six months have expired following the filing of
the first bond claim,
the surety or principal
shall:
(i)
assess the validity of all claims on the bond; and
(ii)
submit a distribution assessment determined in accordance with Subsection
(3)(c)
regarding the bond proceeds to the claimants of valid claims for approval.
(c)
(i)
If the total verifiable claims on the bond are less than the bond amount, then
each bond claimant shall be entitled to the full amount of a valid claim.
(i)
Each bond claimant is entitled to the full amount of a valid claim if the total of the
verifiable claims on the bond are less than the bond amount.
(ii)
If the total verifiable claims exceed the bond amount, then the proceeds shall be
distributed pro rata to the bond claimants of valid claims.
(d)
If the distribution assessment under Subsection
(3)(b)
is not unanimously approved
by the claimants of all valid claims on the bond, the principal or surety shall file an
interpleader action in the state district court where the defaulting dealer was licensed.
(4)
(a)
A person making a claim on the bond shall be awarded attorney fees in cases
successfully prosecuted or settled against the surety or principal if the bond has not
been depleted.
(b)
A surety or principal may not be awarded attorney fees that exceed $2,500 for an
interpleader action filed under Subsection
(3)(d)
.
(4)
(a)
A court shall award attorney fees to a person who successfully prosecutes or
settles a claim if the claim has not depleted the bond.
(b)
A court may not award a surety or principal attorney fees exceeding $2,500 for an
interpleader action.
(5)
(a)
(i)
If a dealer, body shop, or
crusher loses
possession of
the bond required
by this chapter
,
:
(i)
the dealer, body shop, or crusher license is automatically suspended
.
; and
(ii)
the dealer, body shop, or crusher shall immediately return all licenses, pocket
cards, temporary permits, and special plates to the administrator.
(ii)
All licenses, pocket cards, temporary permits, and special plates issued to the
licensee shall be immediately returned to the administrator.
(b)
A dealer, body shop, or
crusher may not
continue to use or permit to be used
use
licenses, pocket cards, temporary permits, or special plates until the required bond is
on file with the administrator and the
administrator reinstates the
license
has been
reinstated
.
(6)
A representative or consignee of a dealer is not required to file a bond if the dealer for
whom the representative or consignee acts fully complies with
the provisions of
this
chapter.
Section 2.
Effective Date.
This bill takes effect on
May 6, 2026
.
1-21-26 10:40 AM