North Carolina § 20-288 - Application for license; license requirements; expiration of license; bond.

§ 20-288. Application for license; license requirements; expiration of license; bond.

A new motor vehicle dealer, motor vehicle sales representative, manufacturer, factory branch, factory representative, distributor, distributor branch, distributor representative, or wholesaler may obtain a license by filing an application with the Division. An application must be on a form provided by the Division and contain the information required by the Division. An application for a license must be accompanied by the required fee. The following requirements also apply to applicants under this section: An application for a new motor vehicle dealer license must be accompanied by an application for a dealer license plate. In addition, the Division shall require each applicant for a new motor vehicle dealer license to certify on the application whether the applicant or any parent, subsidiary, affiliate, or any other entity related to the applicant is a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative. In the event the applicant indicates on the application that the applicant or any parent, subsidiary, affiliate, or any other entity related to the applicant is a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative, the Division shall not issue a motor vehicle dealer license to the applicant until both of the following conditions are satisfied: The applicant states on the application the specific exception or exceptions to the prohibition on the issuance of a motor vehicle dealer license to any manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative for which the applicant contends it qualifies under G.S. 20-305.2(a). If the applicant does not currently hold a motor vehicle dealer license issued by the Division, the Commissioner determines, after an evidentiary hearing, that the applicant qualifies under one or more of the exceptions to the prohibition against the issuance of a motor vehicle dealer license to any manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative provided in G.S. 20-305.2(a). The applicant shall bear the burden of proving the applicant's qualification for the exception or exceptions claimed. Upon submission of a license application by a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative that has not previously been issued a license by the Division, the Division shall promptly publish notice of the license application in the North Carolina Register. The notice shall include the applicant's name, address, application date, and the names and titles of any individual listed on the application as an owner, partner, member, or officer of the applicant. The Division shall not approve or issue any license for a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative earlier than 15 days from the date the notice of the license or license renewal application was published in the North Carolina Register. A used motor vehicle dealer may obtain a license by filing an application, as prescribed in subsection (a) of this section, and providing the following: The required fee. Proof that the applicant, within the last 12 months, has completed a 12-hour licensing course approved by the Division if the applicant is seeking an initial license and a six-hour course approved by the Division if the applicant is seeking a renewal license. The requirements of this subdivision do not apply to a used motor vehicle dealer the primary business of which is the sale of salvage vehicles on behalf of insurers or to a manufactured home dealer licensed under G.S. 143-143.11 who complies with the continuing education requirements of G.S. 143-143.11B. The requirement of this subdivision does not apply to persons age 62 or older as of July 1, 2002, who are seeking a renewal license. This subdivision also does not apply to an applicant who holds a license as a new motor vehicle dealer as defined in G.S. 20-286(13) and operates from an established showroom located in an area within a radius of 30 miles around the location of the established showroom for which the applicant seeks a used motor vehicle dealer license. An applicant who also holds a license as a new motor vehicle dealer may designate a representative to complete the licensing course required by this subdivision. If the applicant is an individual, proof that the applicant is at least 18 years of age and proof that all salespersons employed by the dealer are at least 18 years of age. The application for a dealer license plate. A certification as to whether the applicant or any entity having any common ownership or affiliation with the applicant is a motor vehicle manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative. In the event the applicant indicates on the application that the applicant or any parent, subsidiary, affiliate, or any other entity related to the applicant is a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative, the applicant shall be required to state whether the applicant contends it qualifies for a motor vehicle dealer's license in accordance with any of the exceptions to the prohibition on the issuance of a motor vehicle dealer's license to any manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative, as provided in G.S. 20-305.2(a). The Division shall require in such application, or otherwise, information relating to matters set forth in G.S. 20-294 as grounds for the refusing of licenses, and to other pertinent matters commensurate with the safeguarding of the public interest, all of which shall be considered by the Division in determining the fitness of the applicant to engage in the business for which he seeks a license. The Division shall not require submission of an applicant's fingerprints to be used in performing a criminal history record check of an applicant for a license or license renewal. The Division shall require in such license application and each application for renewal of license a certification that the applicant is familiar with the North Carolina Motor Vehicle Dealers and Manufacturers Licensing Law and with other North Carolina laws governing the conduct and operation of the business for which the license or license renewal is sought and that the applicant shall comply with the provisions of these laws, with the provisions of Article 12 of Chapter 20 of the General Statutes, and with other lawful regulations of the Division. All licenses that are granted shall be for a period of one year unless sooner revoked or suspended. The Division shall vary the expiration dates of all licenses that are granted so that an equal number of licenses expire at the end of each month, quarter, or other period consisting of one or more months to coincide with G.S. 20-79(c). To obtain a license as a wholesaler, an applicant who intends to sell or distribute self-propelled vehicles must have an established office in this State, and an applicant who intends to sell or distribute only trailers or semitrailers of more than 2,500 pounds unloaded weight must have a place of business in this State where the records required under this Article are kept. Each applicant approved by the Division for license as a motor vehicle dealer, manufacturer, factory branch, distributor, distributor branch, or wholesaler shall furnish a corporate surety bond or cash bond or fixed value equivalent of the bond. The amount of the bond for an applicant for a motor vehicle dealer's license is fifty thousand dollars ($50,000) for one established salesroom of the applicant and twenty-five thousand dollars ($25,000) for each of the applicant's additional established salesrooms. The amount of the bond for other applicants required to furnish a bond is fifty thousand dollars ($50,000) for one place of business of the applicant and twenty-five thousand dollars ($25,000) for each of the applicant's additional places of business. A corporate surety bond furnished pursuant to this section or renewal thereof may also be canceled by the surety prior to the next premium anniversary date without the prior written consent of the license holder for the following reasons: Nonpayment of premium in accordance with the terms for issuance of the surety bond; or An act or omission by the license holder or his representative that constitutes substantial and material misrepresentation or nondisclosure of a material fact in obtaining the surety bond or renewing the bond. A corporate surety may refuse to renew a surety bond furnished pursuant to this section by giving or mailing written notice of nonrenewal to the license holder and to the Commissioner not less than 30 days prior to the premium anniversary date of the surety bond. The notice must be given or mailed by certified mail to the license holder at its last known address. Nonrenewal of the surety bond shall not affect any liability incurred or accrued prior to the premium anniversary date of the surety bond. To obtain a license as a motor vehicle dealer, an applicant who intends to deal in self-propelled vehicles must have an established salesroom in this State, and an applicant who intends to deal in only trailers or semitrailers of more than 2,500 pounds unloaded weight must have a place of business in this State where the records required under this Article are kept. An applicant for a license as a manufacturer, a factory branch, a distributor, a distributor branch, a wholesaler, or a motor vehicle dealer must have a separate license for each established office, established salesroom, or other place of business in this State. An application for any of these licenses shall include a list of the applicant's places of business in this State. A corporate surety bond shall be approved by the Commissioner as to form and shall be conditioned that the obligor will faithfully conform to and abide by the provisions of this Article and Article 15. A cash bond or fixed value equivalent thereof shall be approved by the Commissioner as to form and terms of deposits as will secure the ultimate beneficiaries of the bond; and such bond shall not be available for delivery to any person contrary to the rules of the Commissioner. Any purchaser of a motor vehicle, including a motor vehicle dealer, who shall have suffered any loss or damage by the failure of any license holder subject to this subsection to deliver free and clear title to any vehicle purchased from a license holder or any other act of a license holder subject to this subsection that constitutes a violation of this Article or Article 15 of this Chapter shall have the right to institute an action to recover against the license holder and the surety. Every license holder against whom an action is instituted shall notify the Commissioner of the action within 10 days after served with process. Except as provided by G.S. 20-288(f) and (g), a corporate surety bond shall remain in force and effect and may not be canceled by the surety unless the bonded person stops engaging in business or the person's license is denied, suspended, or revoked under G.S. 20-294 . That cancellation may be had only upon 30 days' written notice to the Commissioner and shall not affect any liability incurred or accrued prior to the termination of such 30-day period. This subsection does not apply to a license holder who deals only in trailers having an empty weight of 4,000 pounds or less. This subsection does not apply to manufacturers of, or dealers in, mobile or manufactured homes who furnish a corporate surety bond, cash bond, or fixed value equivalent thereof, pursuant to G.S. 143-143.12 . Any cancellation permitted by this subsection is not effective unless written notice of cancellation has been delivered or mailed to the license holder and to the Commissioner not less than 30 days before the proposed effective date of cancellation. The notice must be given or mailed by certified mail to the license holder at its last known address. The notice must state the reason for cancellation. Cancellation for nonpayment of premium is not effective if the amount due is paid before the effective date set forth in the notice of cancellation. Cancellation of the surety shall not affect any liability incurred or accrued prior to the termination of the 30-day notice period. History (1955, c. 1243, s. 4; 1975, c. 716, s. 5; 1977, c. 560, s. 2; 1979, c. 254; 1981, c. 952, s. 3; 1985, c. 262; 1991, c. 495, s. 1; c. 662, s. 3; 1993, c. 440, s. 3; 1997-429, s. 1; 2001-345, s. 2; 2001-492, s. 4; 2003-254, s. 2; 2004-167, s. 9; 2004-199, s. 59; 2005-99, s. 2; 2006-105, s. 2.3; 2006-191, s. 1; 2006-259, s. 12; 2011-290, ss. 1, 2; 2017-148, s. 1; 2019-125, s. 11; 2020-77, s. 5(a).) Editor's Note. - The preamble to Session Laws 2001-345 reads: "Whereas, not only the setting of standards to protect purchasers of motor vehicles but also the enforcement of substantial penalties applicable when those standards are not met is one of the most effective means to obtain this protection; and "Whereas, more complex laws governing regulation of the sale and distribution of motor vehicles such as the titling of a vehicle, warranties, collection of consumer debt pursuant to Federal Trade Commission regulations, and applicable tax provisions impose a greater number of duties upon independent automobile dealers; and "Whereas, the most effective and consistent means of informing both applicants for licensure and experienced, licensed motor vehicle dealers of major changes and increasing complexities in the law is to develop a program insuring the development and requirement of appropriate continuing education; Now, therefore." Session Laws 2011-290, which, in ss. 1 and 2, substituted "20 miles" for "one mile" in the next-to-last sentence of subdivision (a1)(2), and added subsection (b1), in s. 12, provided: "The terms and provisions of this act shall be applicable to all current and future franchises and other agreements in existence between any new motor vehicle dealer located in this State and a manufacturer or distributor as of the effective date of this act [June 24, 2011]." Session Laws 2011-290, s. 13 is a severability clause. Session Laws 2017-148, s. 6, is a severability clause. Session Laws 2019-125, s. 12, is a severability clause. Session Laws 2020-3, s. 4.7(a)-(h), as amended by Session Laws 2020-97, ss. 3.15(a), 3.16(a), provides: "(a) Definition. - For purposes of this section, 'credential' means any of the following issued by the Division of Motor Vehicles: "(1) Drivers license. "(2) Learner's permit. "(3) Limited learner's permit. "(4) Limited provisional license. "(5) Full provisional license. "(6) Commercial drivers license. "(7) Commercial learner's permit. "(8) Temporary driving certificate. "(9) Special identification card. "(10) Handicapped placard. "(11) Vehicle registration. "(12) Temporary vehicle registration. "(13) Dealer license plate. "(14) Transporter plate. "(15) Loaner/Dealer 'LD' plate. "(16) Vehicle inspection authorization. "(17) Inspection station license. "(18) Inspection mechanic license. "(19) Transportation network company permit. "(20) Motor vehicle dealer license. "(21) Sales representative license. "(22) Manufacturer license. "(23) Distributor license. "(24) Wholesaler license. "(25) Driver training school license. "(26) Driver training school instructor license. "(27) Professional housemoving license. "(b) Extend Validity of Credentials. - Notwithstanding renewal, duration, or expiration provisions of G.S. 20-7 , 20-11, 20-37.6, 20-37.7, 20-37.13, 20-50, 20-66, 20-79, 20-79.02, 20-79.2, 20-183.4B, 20-183.4D, 20-280.3, 20-288, 20-324, and 20-359, or any other provision of law to the contrary, the Division of Motor Vehicles shall extend for a period of five months the validity of any credential that expires on or after March 1, 2020, and before August 1, 2020. The Division shall extend for a period of five months the validity of any credential listed in subdivisions (6), (7), (9), (10), and (18) of subsection (a) of this section that expires on or after March 1, 2020, and before the date 30 days after the date the Governor (i) rescinds Executive Order No. 116 or (ii) issues another executive order lifting restrictions on Division of Motor Vehicles functions. Notwithstanding G.S. 20-37.13 (h) and G.S. 20-37.13 A(a), the Division of Motor Vehicles is authorized to waive the requirement that commercial drivers license and commercial learner's permit holders have a medical examination and certification, as required by federal law, consistent with any waiver of medical qualifications standards issued by the Federal Motor Carrier Safety Administration. A credential extended under this section shall expire five months from the date it otherwise expires as prescribed by law prior to this section. However, the subsequent expiration of a credential extended under this section shall occur on the date prescribed by law prior to this section without regard to the extension. The Division shall notify individuals affected by an extension granted under this section, including information on new expiration dates and how the extension affects subsequent renewal and expiration dates. "(b1) Extension of Intrastate Medical Waivers. - Notwithstanding the limitation on duration of waivers in G.S. 20-37.13 A(b), the Division of Motor Vehicles may extend for up to five months the validity of a medical waiver issued by the Division under G.S. 20-37.13 A if the waiver expires on or after March 1, 2020, and before the date 30 days after the date the Governor (i) rescinds Executive Order No. 116 or (ii) issues another executive order lifting restrictions on Division of Motor Vehicles functions, and the Division's Medical Review Unit determines the extension is appropriate. "(c) Driving Eligibility Certificates. - Notwithstanding G.S. 20-11 (n)(3), a driving eligibility certificate dated on or after February 9, 2020, and before March 10, 2020, remains valid and may be accepted by the Division of Motor Vehicles to meet the requirements for a license or permit issued under G.S. 20-11 until 30 days after the date the Governor rescinds Executive Order No. 116 or the date the Division reopens all drivers license offices, whichever is earlier. "(d) Waive Penalties. - Notwithstanding any provision of law to the contrary, the Division shall waive any fines, fees, or penalties associated with failing to renew a credential during the period of time the credential is valid by extension under subsection (b) of this section. "(e) Motor Vehicle Taxes. - Notwithstanding any provision of law to the contrary, due dates for motor vehicle taxes that are tied to registration expiration under Article 22A of Chapter 105 of the General Statutes shall be extended to correspond with extended expiration dates under subsection (b) of this section. "(f) Validity by Extension a Defense. - A person may not be convicted or found responsible for any offense resulting from failure to renew a credential issued by the Division if, when tried for that offense, the person shows that the offense occurred during the period of time the credential is valid by extension under subsection (b) of this section. "(g) Report. - Within 30 days of the extensions made under subsection (b) of this section, the Division shall submit a report to the Joint Legislative Transportation Oversight Committee and the Fiscal Research Division detailing implementation of this section. "(h) Effective Date. - This section is effective retroactively to March 1, 2020, and applies to expirations occurring on or after that date." Session Laws 2020-3, s. 5, is a severability clause. Session Laws 2020-77, s. 5(c), made the last sentence in subsection (b) of this section, as added by Session Laws 2020-77, s. 5(a), effective July 1, 2020, and applicable to applications for licensure or renewal received on or after that date. Session Laws 2020-97, s. 4.5, is a severability clause. Effect of Amendments. - Session Laws 2001-345, s. 2, effective July 1, 2002, and applicable to violations and offenses committed on or after that date and licenses issued to used motor vehicle dealers on or after that date, substituted "A new motor vehicle dealer. . . or wholesaler" for "A person" at the beginning of the first sentence of subsection (a); and added subsection (a1). Session Laws 2003-254, s. 2, effective July 1, 2003, and applicable to licenses issued or renewed on or after that date, in the first and second paragraphs of subsection (d), substituted "more than 2,500 punds" for "less than 2500 pounds." Session Laws 2004-167, s. 9, as amended by Session Laws 2004-199, s. 59, effective January 1, 2006, in subsection (c), inserted "one year from the date issued" following "shall expire," deleted "sooner" following "unless," and deleted ", on June 30 of the year following the date of issue" following "suspended." Session Laws 2005-99, s. 2, effective January 1, 2006, rewrote subsection (c). Session Laws 2006-105, s. 2.3, effective October 1, 2006, substituted "Except as provided by G.S. 20-288(f) and (g), a" for "A" at the beginning of the fifth sentence in the second paragraph of subsection (e); and added subsections (f) and (g). Session Laws 2006-191, s. 1, effective January 1, 2007, and applicable to applications for used motor vehicle dealer license filed on or after that date, added the fourth and fifth sentences to subdivision (a1)(2). Session Laws 2006-259, s. 12, effective August 23, 2006, substituted "Nonrenewal" for "cancellation" in subsection (g). Session Laws 2017-148, s. 1, effective July 20, 2017, substituted "located in an area within a radius of 30 miles around the location of" for "20 miles or less from" in the second to last sentence in subdivision (a1)(2). Session Laws 2019-125, s. 11, effective July 19, 2019, substituted "fee. The following requirements also apply to applicants under this section:" for "fee and by an application for a dealer license plate" at the end of subsection (a); added subdivisions (a)(1) and (a)(2); and added subdivision (a1)(5). Session Laws 2020-77, s. 5(a), added the last sentence in subsection (b). For effective date and applicability, see editor's note. Legal Periodicals. - For survey on consumer law, see 70 N.C.L. Rev. 1959 (1992).