Texas § TN.503.033 - SECURITY REQUIREMENT

§ TN.503.033. SECURITY REQUIREMENT

SECURITY REQUIREMENT. (a) The department may not issue or renew a motor vehicle dealer general distinguishing number or a wholesale motor vehicle auction general distinguishing number unless the applicant provides to the department satisfactory proof that the applicant has purchased a properly executed surety bond in the amount of $50,000 with a good and sufficient surety approved by the department. (b) The surety bond must be: (1) in a form approved by the attorney general; (2) conditioned on: (A) the payment by the applicant of all valid bank drafts, including checks, drawn by the applicant to buy motor vehicles; and (B) the transfer by the applicant of good title to each motor vehicle the applicant offers for sale. (c) Repealed by Acts 2011, 82nd Leg., R.S., Ch. 1290, Sec. 44(a)(3), eff. September 1, 2011. (d) A person may recover against a surety bond if the person obtains against a person issued a motor vehicle dealer general distinguishing number or a wholesale motor vehicle auction general distinguishing number a judgment assessing damages and reasonable attorney's fees based on an act or omission on which the bond is conditioned that occurred during the term for which the general distinguishing number was valid. (e) The liability imposed on a surety is limited to: (1) the amount: (A) of the valid bank drafts, including checks, drawn by the applicant to buy motor vehicles; or (B) paid to the applicant for a motor vehicle for which the applicant did not deliver good title; and (2) attorney's fees that are incurred in the recovery of the judgment and that are reasonable in relation to the work performed. (f) The liability of a surety may not exceed the face value of the surety bond. A surety is not liable for successive claims in excess of the bond amount regardless of the number of claims made against the bond or the number of years the bond remains in force. (g) A dealer shall post, adjacent to and in the same manner as the dealer's general distinguishing number is posted, notice of the surety bond and the procedure by which a claimant may recover against the surety bond. The department by rule may prescribe the form of the notice required under this subsection. (h) The department shall publish on the department's Internet website: (1) the procedure by which a claimant may recover against a surety bond; and (2) the department's contact information. (i) This section does not apply to a person licensed as a franchised motor vehicle dealer by the department. Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995. Amended by Acts 1997, 75th Leg., ch. 755, Sec. 1, eff. Sept. 1, 1997. Amended by: Acts 2011, 82nd Leg., R.S., Ch. 1290 (H.B. 2017 ), Sec. 28, eff. September 1, 2011. Acts 2011, 82nd Leg., R.S., Ch. 1290 (H.B. 2017 ), Sec. 44(a)(3), eff. September 1, 2011. Acts 2021, 87th Leg., R.S., Ch. 493 (H.B. 3533 ), Sec. 1, eff. September 1, 2021.