Florida Independent Automobile Dealers Association Dealer OnLine PreLicense Manual

Transcription

1 Florida Independent Automobile Dealers Association Dealer OnLine PreLicense Manual 02/16

2 FIADA This Training Manual Was Produced By The Florida Independent Automobile Dealers Association, Inc. Education Department 1840 Fiddler Court Tallahassee, Florida Phone: (850) FAX: (850) Copyright 2016 by Florida Independent Automobile Dealers Association, Inc 02/2016.

3 FIADA Table of Contents Section 1: Dealer License Laws... 1 Section 2: Title and Registration Requirements Section 3: Tax Information For Motor Vehicle Dealers Section 4: Motor Vehicle Sales Finance Section 5: Attorney General Enforcement Section 6: Federal Regulations Section 7: Emissions and Environmental Issues Section 8: Dealer Financial Operations Section 9: Dealer Resources

4 Section 1 Dealer License Laws 2

5 Dealer License Laws What Is A Dealer? Florida law defines a motor vehicle dealer as "any person engaged in the business of buying, selling, or dealing in motor vehicles or offering or displaying motor vehicles for sale at wholesale or retail, or who may service and repair motor vehicles pursuant to an agreement as defined in s (1)" (s (1)(c), F.S.). Currently, there are five categories of motor vehicle dealers: 1. "Franchised motor vehicle dealer" means any person who engages in the business of repairing, servicing, buying, selling, or dealing in motor vehicles pursuant to an agreement as defined in s (1). 2. "Independent motor vehicle dealer" means any person other than a franchised or wholesale motor vehicle dealer who engages in the business of buying, selling, or dealing in motor vehicles, and who may service and repair motor vehicles. Typically, this is known as a "used car dealer". However, an Independent Motor Vehicle Dealer also includes someone who sells used motorcycles, trucks, heavy equipment that is titled, and certain types of trailers that weigh more than 2,000 pounds. 3. "Wholesale motor vehicle dealer" means any person who engages exclusively in the business of buying, selling, or dealing in motor vehicles at wholesale or with motor vehicle auctions. 4. "Motor vehicle auction" means any person offering motor vehicles or recreational vehicles for sale to the highest bidder where buyers are licensed motor vehicle dealers. Such person shall not sell a vehicle to anyone other than a licensed motor vehicle dealer. 5. "Salvage motor vehicle dealer" means any person who engages in the business of acquiring salvaged or wrecked motor vehicles for the purpose of reselling them and their parts. All of the above is contained in ss (1-5), Florida Statutes. Salvage Dealers expanded The salvage dealer deals in parts only. To offer road worthy vehicles requires an Independent Dealer license. It is legal to have a Salvage dealer s (SD) and an Independent dealer s (VI) license at the same location as long as the owner-operator is the same of each. Dealer must confirm with the city and county code enforcement departments to see if they allow the Salvage Dealer license at this location. This is the youngest approved license and is still evolving. The Division of Motorist Services, Department of Revenue, Environmental Protection Agency, Law Enforcement, to name a few, have 3

6 some level of authority over this industry. Communicate with each one early on to determine requirements and how to provide them what they want, when they want it, in the manner they want it. Good record keeping is essential to providing an overseeing agency what they want and for the dealer to make good informed decisions to maximize the profits available in what can be a very lucrative business. What follows is a small insight to various relevant statutes. f.s A salvage motor vehicle dealer is exempt from the requirements for garage liability insurance and personal injury protection insurance on those vehicles that cannot be legally operated on road, highways, or streets in this state. f.s (10) The department may adopt rules to implement an electronic system for issuing salvage certificates of title and certificates of destruction. f.s Definitions; dismantling, destruction, change of identity of motor vehicle or mobile home; salvage. s (7)(e) Derelict motor vehicle means: 1. Any motor vehicle as defined in s (1) or mobile home as defined in s (2), with or without all parts, major parts, or major component parts, which is valued under $1,000, is at least 10 model years old, beginning with the model year of the vehicle as year one, and is in such condition that its highest or primary value is for sale, transport, or delivery to a licensed salvage motor vehicle dealer or registered secondary metals recycler for dismantling its component parts or conversion to scrap metal; or 2. Any trailer as defined in s (1), with or without all parts, major parts, or major component parts, which is valued under $5,000, is at least 10 model years old, beginning with the model year of the vehicle as year one, and is in such condition that its highest or primary value is for sale, transport, or delivery to a licensed salvage motor vehicle dealer or registered secondary metals recycler for conversion to scrap metal. (f) Derelict motor vehicle certificate means a certificate issued by the department which serves as evidence that a derelict motor vehicle will be dismantled or converted to scrap metal. This certificate may be obtained by completing a derelict motor vehicle certificate application authorized by the department. A derelict motor vehicle certificate may be reassigned only one time if the derelict motor vehicle certificate was completed by a licensed salvage motor vehicle dealer and the derelict motor vehicle was sold to another licensed salvage motor vehicle dealer or a secondary metals recycler. (i) Major component parts means: 4

7 1. For motor vehicles other than motorcycles, any fender, hood, bumper, cowl assembly, rear quarter panel, trunk lid, door, deck lid, floor pan, engine, frame, transmission, catalytic converter, or airbag. 2. For trucks, in addition to those parts listed in subparagraph 1., any truck bed, including dump, wrecker, crane, mixer, cargo box, or any bed which mounts to a truck frame. 3. For motorcycles, the body assembly, frame, fenders, gas tanks, engine, cylinder block, heads, engine case, crank case, transmission, drive train, front fork assembly, and wheels. 4. For mobile homes, the frame. If a valid certificate of title, salvage certificate of title, or certificate of destruction is not available, a derelict motor vehicle certificate application shall be completed by the seller or owner of the motor vehicle or mobile home, the seller s or owner s authorized transporter, and the licensed salvage motor vehicle dealer at the time of sale, transport, or delivery to the licensed salvage motor vehicle dealer. The derelict motor vehicle certificate application shall be used by the seller or owner, the seller s or owner s authorized transporter, and the licensed salvage motor vehicle dealer to obtain a derelict motor vehicle certificate from the department. The derelict motor vehicle certificate application must be accompanied by a legible copy of the seller s or owner s valid Florida driver s license or Florida identification card, or a valid driver s license or identification card issued by another state. If the seller is not the owner of record of the vehicle being sold, the dealer shall, at the time of sale, ensure that a smudge-free right thumbprint, or other digit if the seller has no right thumb, of the seller is imprinted upon the derelict motor vehicle certificate application and that a legible copy of the seller s driver s license or identification card is affixed to the application and transmitted to the department. The licensed salvage motor vehicle dealer shall secure the derelict motor vehicle for 3 full business days, excluding weekends and holidays, if there is no active lien or a lien of 3 years or more on the department s records before destroying or dismantling the derelict motor vehicle and shall follow all reporting procedures established by the department, including electronic notification to the department or delivery of the original derelict motor vehicle certificate application to an agent of the department within 24 hours after receiving the derelict motor vehicle. If there is an active lien of less than 3 years on the derelict motor vehicle, the licensed salvage motor vehicle dealer shall secure the derelict motor vehicle for 10 days. The department shall notify the lienholder that a derelict motor vehicle certificate has been issued and shall notify the lienholder of its intention to remove the lien. Ten days after receipt of the motor vehicle derelict certificate application, the department may remove the lien from its records if a written statement protesting removal of the lien is not received by the department from the lienholder within the 10-day period. 5

8 However, if the lienholder files with the department and the licensed salvage motor vehicle dealer within the 10-day period a written statement that the lien is still outstanding, the department shall not remove the lien and shall place an administrative hold on the record for 30 days to allow the lienholder to apply for title to the vehicle or a repossession certificate under s The licensed salvage motor vehicle dealer must secure the derelict motor vehicle until the department s administrative stop is removed, the lienholder submits a lien satisfaction, or the lienholder takes possession of the vehicle. Mobile Home Dealer (Separate training class required for this license.) There are also two other categories of licensed dealers: Mobile Home Dealer and Recreational Vehicle Dealer. A "Mobile Home Dealer" means any person engaged in the business of buying, selling, or dealing in mobile homes or offering or displaying mobile homes for sale. The term "dealer" includes a mobile home broker. A "Mobile home broker" means any person who is engaged in the business of offering to procure or procuring used mobile homes for the general public; who holds himself or herself out through solicitation, advertisement, or otherwise as one who offers to procure or procures used mobile homes for the general public; or who acts as the agent or intermediary on behalf of the owner or seller of a used mobile home which is for sale or who assists or represents the seller in finding a buyer for the mobile home (ss (1)(a) and (1)(b), F.S.). Recreational Vehicle Dealer (Separate training class required for this license.) A "Recreational Vehicle Dealer" means any person engaged in the business of buying, selling, or dealing in recreational vehicles or offering or displaying recreational vehicles for sale. The term "dealer" includes a recreational vehicle broker. A "Recreational vehicle broker" means any person who is engaged in the business of offering to procure or procuring used recreational vehicles for the general public; who holds himself or herself out through solicitation, advertisement, or otherwise as one who offers to procure or procures used recreational vehicles for the general public; or who acts as the agent or intermediary on behalf of the owner or seller of a used recreational vehicle which is for sale or who assists or represents the seller in finding a buyer for the recreational vehicle (ss (1)(a) and (1)(b), F.S.). Who Needs A Dealer License? Florida law states that anyone who is engaged in the business of buying, selling, or dealing in motor vehicles or offering or displaying motor vehicles for sale at wholesale or retail is required to become a dealer. It doesn't matter how many vehicles a person buys or sells once they "engage in business" to deal in motor vehicles; they then need a license. It is a myth that 6

9 you can sell up to three vehicles without a license. The law "presumes" a person is engaged to be in business if he deals in three or more vehicles in a 12 month period. In the case of mobile homes and recreational vehicles, the law "presumes" a person to be a dealer if she sells one or more within a 12-month period. The term "sale" and "selling" include lease-purchase transactions. This means that leasing companies that offer a vehicle through a lease-purchase plan must be licensed as an independent or franchised dealer. Which License Is Required To Only Wholesale Vehicles? Many people who go into the motor vehicle business often plan to "wholesale" only. That is, they only intend to buy and sell at auctions or buy and sell cars directly from and to dealers. There is a separate "Wholesale" license issued to those persons. The requirements for the license are the same for an Independent dealer license with the exception that a wholesale dealer does not need to have a display or storage area at its licensed location. Wholesale dealers can never retail vehicles nor are they allowed to purchase and use dealer plates. A dealer with an Independent or Franchised Dealer License can both retail and wholesale motor vehicles. Who Is Exempt From Having A License? Any persons or businesses not engaged in the purchase or sale of motor vehicles as a business who dispose of their own vehicles are not required to be licensed. The law also exempts persons who sell vehicles they acquire through foreclosure or by operation of law. (Vehicles sold after being repossessed or for unpaid towing, storage or repair bills are examples.) Public officials who sell government owned vehicles as part of their official duties are exempt from having a dealer license. Rental car and leasing companies who sell their inventory to licensed dealers are also exempt. Finally, persons engaged in the business of manufacturing, selling, or offering or displaying for sale at wholesale or retail no more than 25 trailers in a 12-month period are exempt. What About A Motor Vehicle Broker? The law does not require a motor vehicle broker to have a dealer license because a broker never takes possession of vehicles, owns inventory or takes trade-ins. A broker simply brings a buyer and a seller together who negotiate their own transaction. An agent or wholesaler representing a licensed dealer is not considered a broker. Mobile home brokers and Recreational vehicle brokers ARE required to obtain a license. What's The Penalty For Not Having A License? Not having a license when required to do so violates two Florida Statutes. First, it is a second degree misdemeanor. Second, someone dealing in motor vehicles without a license is also deemed to be guilty of an unfair and deceptive trade practice. An injunction may be obtained by 7

10 the Division of Motorist Services to stop individuals who continue to deal in vehicles without a license after proper notice. This is an offense that could result in an arrest and fines. What Is Curbstoning? Curbstoning occurs when individuals buy, sell and deal in motor vehicles and do not have a dealer license. Often these individuals will be dealing in vehicles with "open titles" to avoid being in the chain of ownership. Sometimes these individuals will use a licensed dealer to acquire vehicles and sell them from private residences or parking lots as if they were private sales. In this instance the curbstoner is "renting" the use of a dealer's license, which is illegal. A dealer may allow only a "bona fide employee" to buy and sell vehicles under the dealer's license. The Division of Motorist Services, local code enforcement and law enforcement agencies may have vehicles that are illegally displayed "for sale" immediately towed at the owner's expense. To recover the towed vehicle the owner must report to the enforcement agency that authorized the tow, produce proof of ownership and pay a fine of $ They must then take an Authorization To Release Vehicle After Curbstoning Citation form, HSMV to the towing and storage yard and pay for towing and storage to get their vehicle back. Dealer vehicles may only be displayed as authorized by the Division of Motorist Services. Licenses Issued By the Division of Motorist Services The Division of Motorist Services issues dealer licenses to dealers, manufacturers and distributors for motor vehicles, mobile homes and recreational vehicles. The common types of licenses you will most often see have the following prefix as part of the license number: VI VF SF VA VW DH BH RV RU SD Issued to independent motor vehicle dealers who buy, sell and deal in used cars, trucks and motorcycles; Issued to franchise dealers who sell new cars, trucks and motorcycles; Issued to service facilities associated with VF license; Issued to motor vehicle dealer auctions; Issued to dealers who only wholesale motor vehicles; Issued to mobile home dealers; Issued to mobile home brokers; Issued to new recreational vehicle dealers Issued to used RV dealers; and Issued to salvage dealers. The License Certificate A license certificate is issued by the Division of Motorist Services upon initial licensure, name changes and address changes. The certificate will have your dealer number printed 8

11 on the upper right hand corner. That number is a permanent number. (See "Exhibit DL- 1" for a sample of the dealer license.) You will also receive another document with your dealer license that contains your four digit "PIN." The PIN is a security feature that allows the holder to transfer titles and to purchase dealer plates and temporary tags. The PIN is used in conjunction with the dealer license number at the tax collector's office to complete those transactions. Therefore, you will only give the PIN to trusted employees. If the PIN is compromised, you will need to notify DIVISION OF MOTORIST SERVICES immediately in order to get a new PIN issued. Each year upon renewing your license, you will carry forward the same PIN; it will only change upon request. "Exhibit DL-2" is a sample of the form you will receive from the Division of Motorist Services. Safeguard this document. License Periods Independent, Auction, Wholesale and Salvage: Franchised and Service Facility: Mobile Home and Recreational Vehicles: May 1 through April 30 January 1 through December 31 October 1 through September 30 It is important to know that you must file a renewal application with the Division of Motorist Services at least 30 days prior to the license expiration date to ensure that your license is valid on the first day of your licensing period. You cannot transact business without a current license. The Application Process For a few, the application process may appear ominous, but for most, the process flows quickly. It is important throughout this process to keep in touch with your local Division of Motorist Services representative. The Compliance Examiner/Officer can be your best ally and help guide you through the process and be a valuable source of information throughout your career as a dealer. Before you begin the application process you must first consider a few things: 1. What kind of business do you intend to operate, wholesale or retail? How many vehicles do you intend to have in inventory? This helps to determine what kind of location you will need. 2. You will need to decide on what type of business entity you will be operating your business with. Will it be a sole proprietorship, partnership, corporation, LLC, or LLP? You are strongly urged to get professional advice from an accountant or a business attorney to help with these decisions. 9

12 3. You must consider where you intend to conduct your business, keeping in mind that you will become licensed to deal in motor vehicles at a specific location. Do not commit yourself to a lease or purchase property if you are not sure the location will satisfy DIVISION OF MOTORIST SERVICES rules and meet local zoning approval. Zoning requirements throughout the state have become stricter with regard to licensing motor vehicle dealerships. Once these decisions have been made, you need to contact the DIVISION OF MOTORIST SERVICES to obtain a dealer license application, approved electronic fingerprint vendors and a blank surety bond form. The DIVISION OF MOTORIST SERVICES will refer you to a dealer training school and request that you set up an appointment with a Compliance Examiner/Officer to have your proposed location inspected. Remember: do not mail your application to Tallahassee! You must process the application package and fees through your local Compliance Examiner/Officer and the DIVISION OF MOTORIST SERVICES Regional Office. See Exhibit DL-3 for a list of Regional Offices. The Application Package 1. Complete the application form HSMV for dealer license in full, making sure to follow the instructions provided. All questions must be properly answered. If you have been charged and convicted of a felony, you must provide an official disposition of the case (e.g., conviction, adjudication withheld, civil rights restored, etc.). Also, if you have been convicted of a misdemeanor or any violation of motor vehicle statutes or DIVISION OF MOTORIST SERVICES rules, you will also need to provide documentation. The attorney that handled your case should be able to assist you, or you may contact the Clerk of the Court in the county where the charges were filed to obtain copies of court records. If you have had your bond cancelled or denied you need to write a statement concerning the facts of the cancellation or denial. 2. An electronic fingerprint card must be submitted for each person listed on the application. That means one for a sole owner, one for each member of a partnership, one for each principal officer and director of a corporation, and one for each member/partner and managing member/partner of an LLC/LLP, as listed on the dealer application. NEW April 1, 2012 all fingerprinting may only be obtained from an approved vendor. The list may be obtained from the following site: s.pdf Turn in the receipt with the application. 3. All business names and fictitious name(s) must be registered with the Division of Corporations. If you intend to operate your business with a fictitious trade name, that name must be registered with the Secretary of State. Proof that you filed your fictitious trade namemust be supplied with the application. The Secretary of State's Office can be contacted at (850) or documentation can be obtained and applications can be made through the Internet at 4. If your business is incorporated, you will have to provide a copy of your corporate charter and a copy of the latest corporate minutes reflecting the current officers. All businesses that are incorporated must submit a copy of the Articles of Incorporation. Likewise, if your business is a LLC or LLP, you must provide a copy of the Articles of Organization and a copy of the Operating Agreement. If you do not have an Operating 10

13 Agreement, you must submit an affidavit stating the same. All persons' names that appear on your corporate or company papers must appear on the application; you will need an electronic fingerprint completed at a FDLE approved service provider for each of these persons. A list of these providers can be accessed at the Department s website at 5. If the property is leased, you will need to provide a copy of the lease. The lease must be in the name of the entity that is applying for a dealer license. If the property is owned by the applicant, then proof of ownership must be provided with the application. A copy of a deed or tax record will suffice. 6. Obtain and record your Federal Employer Identification Number on your application. This number is your federal taxpayer I.D. number and is obtained from the Internal Revenue Service. If you are a sole owner/proprietor and have no employees and do not have an FEIN, then you will record your social security number and provide an affidavit stating that you have no employees and will perform all the duties of the business yourself. 7. Obtain and record your State of Florida sales tax registration number. Contact the Florida Department of Revenue to obtain this number. 8. For Independent, Franchised, Auction, Wholesale and Salvage dealers, purchase a ƒ $25,000 surety bond, issued by an insurance company licensed in Florida, and provide documentation for the bond on a form supplied by the DIVISION OF MOTORIST SERVICES. For Mobile Home dealers, purchase a $25,000 surety bond if the dealer is operating with four or fewer supplemental licenses, or purchase a $50,000 surety bond if the dealer has more than four supplemental licenses. For Recreational Vehicle dealers, purchase a $10,000 surety bond if the dealer has four or fewer supplemental locations, or purchase a $20,000 surety bond if the dealer has more than four supplemental locations. Motor Vehicle Dealers may opt to obtain an irrevocable letter of credit instead of the surety bond. The irrevocable letter of credit must be issued on the Division of Motorist Services form by a bank qualified to do business in Florida. See Exhibits DL-4 Form HSMV 86020: SuretyBond, for Motor Vehicle Dealer and DL-5 Form HSMV 86057: FloridaMotorVehicleDealerIrrevocableLetterofCredit. Mobile home dealers must use Form HSMV 86018: SuretyBond, for Mobile Home Dealers and 86058: FloridaMobile HomeDealerIrrevocableLetterofCredit. Recreational vehicle dealers must use Form 86019: SuretyBond, Recreational Vehicle Dealer. The irrevocable letter of credit does not apply to RV dealers. 9. Independent dealers (VI), Auction dealers (VA), Wholesale dealers (VW), and Salvage dealers (SD) have the option to submit a copy of: A garage liability insurance certificate which shall include, at a minimum, $25,000 combined single-limit liability coverage including bodily injury and property damage protection and $10,000 personal injury protection; OR A general liability insurance policy coupled with a business automobile policy, which shall included, at a minimum, $25,000 combined single-limit liability coverage including bodily injury and property damage protection and $10,000 personal injury. 11

14 Franchise dealers (VF), Recreational dealers (RV & RU), and Mobile Home dealers/brokers (DH/BH) selling recreational vehicles must submit a garage liability insurance certificate which shall include, at a minimum, $25,000 combined single-limit liability coverage including bodily injury and property damage protection and $10,000 personal injury protection. 10. A copy of the original certificate you receive from the dealer training school must be part of the package. 11. All fees in the form of a check or money order are to be made payable to the DIVISION OF MOTORIST SERVICES and must accompany the application. As of the date of this printing, the fee for a resident dealer in all categories of licenses covered is $ Non-resident dealers must pay a fee of $2,000 per county in which they intend to operate. The fee for processing electronic fingerprinting is paid to the approved vendor. These fees are nonrefundable. 12. On rare occasions, certain circumstances may require additional supporting documentation. Your Compliance Examiner/Officer will advise you about any other necessary documentation that you must provide. What Happens If My Application Is Denied? Applications are typically denied because the application is incomplete, one of the applicants cannot qualify for a license due to a criminal record, or the dealer location does not qualify. Before your application is accepted, DIVISION OF MOTORIST SERVICES will most likely advise you up front if it appears that it will be denied. You will be given an opportunity to make any changes needed to qualify for the license. However, if the license application is accepted and subsequently denied, the applicant has a legal right to appeal the decision. This is usually done through an administrative hearing. An applicant who has been denied a license will be notified of the DIVISION OF MOTORIST SERVICES's decision to deny the license in writing. If you suspect there will be a problem with your application, you may want to contact the DIVISION OF MOTORIST SERVICES Regional Administrator and request an informal conference to discuss these issues, prior to submitting it. Location Requirements Florida Law requires each dealer to have a permanent location where the business of a motor vehicle dealer can be conducted lawfully and in good faith. - The location must not be a residence or part of any other business. - The location must have sufficient unoccupied space to adequately store or display vehicles offered "for sale." - Each location must be physically inspected before an application for license is processed. Because the primary reason for not qualifying for a license is attributed to an unqualified location, the DIVISION OF MOTORIST SERVICES insists on the location inspection early on in the application process. - The DIVISION OF MOTORIST SERVICES location rule is summarized below. - Remember, if the DIVISION OF MOTORIST SERVICES approves your location, you still need to check with your local zoning authority to ensure you can operate your business at your 12

15 intended location. You also need to check with the city and county concerning occupational licenses and certificates of occupancy. NOTE: If a dealer is still operating at your proposed location, that dealer's license must be processed for cancellation (that is, cancelled for that location) before your application will be accepted by DIVISION OF MOTORIST SERVICES. This takes time; it is suggested that you check with your Compliance Officer. Summary of Location Requirements 1. Each location shall have a permanent office that is not part of a residence. The office shall have at least 100 square feet of space, excluding hallways, closets or restrooms. The ceilings shall be at least 7 feet high. 2. The office must be clearly separated from any other business being operated in the structure that houses the dealership. 3. Each dealer must maintain display spaces as part of the place of business. The spaces must: a. Be of sufficient size to display or store all vehicles offered "for sale." The spaces may be inside or outside. b. Be under the exclusive control of the dealer and not be part of an area set aside for customer, employee or general public parking. Nor shall it include public right-of-way. c. Be contiguous to the dealership office or allow for easy access by dealership customers. d. Have immediate and direct access to a public street or highway or be situated on property to which public access has been granted. e. Be physically divided from any other dealer's display space by a permanent barrier no less than three feet high and must distinguish one dealer's display space from another dealer's display space. 4. The business of a motor vehicle dealer must be the principal business conducted at the licensed location. 5. The dealer or designee shall be available to customers and DIVISION OF MOTORIST SERVICES during regular business hours. Therefore, the dealer must post hours of operation in a clear manner at or near the main entrance to the dealership office on a placard, sign or by other durable means. 6. The dealer shall have a permanent sign identifying the dealership at its place of business and be of sufficient size so as to be read and visible from a distance of 50 yards from the public right-of-way serving the dealership. (NOTE: Be certain to check local zoning requirements for signage.) If DIVISION OF MOTORIST SERVICES does not approve your location, ask the representative to cite the specific rule violation. A copy of Rule 15C is included in its entirety in Exhibit DL-7. You can also contact the Chief of Field Operations for further clarification and review. Changes After Licensing It is not uncommon for a dealer to make business changes after initial licensing. Often a sole owner/proprietor may take on a partner or decide to incorporate. Dealers may add a location, move their location or change the name of their business. Some of these changes can be handled as simple license modifications; others require a new license application. Here are some of the most common changes after initial licensing. 13

16 All corporate officer changes must be submitted for form HSMV This form can be accessed at All other modifications to an existing license must be submitted on for HSMV This can be accessed at A check list of required documents is attached with this form for all type of modifications to an existing license. 1. Adding a location under the same name and ownership. This requires an application (form HSMV 86072) from DIVISION OF MOTORIST SERVICES for a "supplemental location." Your location must be inspected and approved by your local DIVISION OF MOTORIST SERVICES Compliance Examiner/Officer. If the location is leased, you will need a copy of the lease or if owned, you will need a copy of the deed or tax record. All location requirements apply (see Rule 15C-7.003, F.A.C.) The fee is $ The license is valid from the date of issue until the expiration of your license period. The cost to renew the license is $ Note that when you first become licensed, your initial location is considered by DIVISION OF MOTORIST SERVICES as your "main location." If you choose to change your main location to a supplemental location, you must advise your Compliance Examiner/ Officer so he/she may update the dealer license records. The license issued to supplemental locations will have the same dealer number but shall include a letter as a suffix. The first additional location will have the suffix "2", the second "3" and so on. Opening up another location under a different ownership entity is not considered a supplemental location, but rather a separate license requiring the submission of a complete application package. 2. Name changes where there is no change in business entity. In this case, a dealer is not making any changes in its business entity, but only the name of the business. If the business is a sole proprietorship or partnership, the dealer must file a new fictitious trade name. If the business is incorporated (or LLC/LLP) and the dealer changes the corporate name only and does not form a new corporation, then the dealer must submit proof from the Secretary of State's office that the corporate name was changed. Forming a new corporation requires the submission of a complete application package. In all name change cases, the dealer must submit an application (form HSMV 86072) for the name change. The fee is $25.00, along with the fictitious trade name filing or corporate name update. The dealer must have a bond rider from the insurance company that issued the dealer's bond showing that the dealership has changed its name. If the dealer has an irrevocable letter of credit from the bank, then the bank must provide an endorsement for the irrevocable letter of credit filed with DIVISION OF MOTORIST SERVICES. You will also want to notify the company that issued your garage liability insurance, the auctions you do business with, the tax collector's office, and other agencies that you have licenses and permits with. You will also have to change your sign, forms, and any other documents that show your business name. You will not be able to do business under your new name until you have filed an application with the DIVISION OF MOTORIST SERVICES and it has been approved. Motor vehicle dealers who are submitting form HSMV for name change must also submit an affidavit stating that there has been no change in the majority ownership. Franchise motor vehicle dealers must submit a second affidavit indicating there has been no change in the dealeroperator whose name appears on the Sales and Service Agreement. An original bond rider must be submitted amending the bond to the new name. If a fictitious name has been changed or added, it must also be recorded with the Secretary of State s Division of Corporations Office and a copy of the certification stating the fictitious name must be submitted 14

17 along with the application. Please note: The name change for franchise dealers must be approved by their manufacturers. The manufacturer(s) must advise the Department in writing of their approval of the name change for their franchise dealer. 3. Moving a location. There may be occasions when you want or need to change your business location, whether it is your main location or any of your supplemental locations. To do so, you will need to complete DIVISION OF MOTORIST SERVICES form HSMV and submit a copy of the lease, if the location is leased or a copy of the deed or tax record if the location is owned. The location must be inspected and approved by the local DIVISION OF MOTORIST SERVICES Compliance Examiner/Officer. The fee for changing a location is $ You will need to check with local zoning authorities and other agencies that you have licenses or permits with to determine what other requirements you must meet to change a location. Remember never change your location without notifying the DIVISION OF MOTORIST SERVICES first. If you don't, your license may be revoked because DIVISION OF MOTORIST SERVICES can't find you! Franchised dealers must also meet other relocation requirements as provided for in s , Florida Statutes. 4. Postal updates. Even though you may not have physically moved your location the postal authorities may have changed your address. It is important that DIVISION OF MOTORIST SERVICES can locate you. New employees may not know where you are located or your mail may be misdirected. You may file an abbreviated application on form HSMV with DIVISION OF MOTORIST SERVICES anytime during the year. There is no fee for postal updates. Be sure to include a copy of the USPS notice advising you of an update. 5. Corporate updates. When a corporation holding a license has a change in corporate officers that does not involve a majority change of ownership, the business must report the change of corporate officers by completing DIVISION OF MOTORIST SERVICES form HSMV and answering the appropriate questions about officers. If applicable, supporting documentation may be required concerning criminal records and bond cancellations. An electronic fingerprint from a FDLE approved service provider is required for all new officers. A copy of the corporate minutes reflecting the election of new officers must be attached to the application. There is no fee to update a license for corporate officers. The application form HSMV 86056, Application for a License as a Motor Vehicle, Mobile Home, or Recreational Vehicle Dealer, must be completed and signed by an existing officer and page 5 must be signed by each new officer and must be notarized. 6. Change in bonding companies. If you change bonding companies for any reason, you must submit the new original surety bond to the DIVISION OF MOTORIST SERVICES. The bond coverage must be continuous; therefore, the new bond must be issued so there is no lapse in coverage. If your existing bond is canceled by your insurance company and you do not secure a replacement bond before the cancellation date, then you must cease to do business. Your dealer license will automatically be revoked. Insurance companies will give you 30 days notice if they intend to cancel your bond. They will also notify the DIVISION OF MOTORIST SERVICES. Once notified, the DIVISION OF MOTORIST SERVICES will expect the dealer to submit a new bond. If a new bond or a reinstatement from your current bonding company is not 15

18 submitted, DIVISION OF MOTORIST SERVICES will revoke your license. Bonding companies will generally cancel a dealer because of excessive claims, bad checks or a change in carriers who may have more stringent financial requirements for issuing bonds that you may not meet. You may contact the Department of Financial Services concerning unfair bond cancellations. A dealer may submit an Irrevocable Letter of Credit in lieu of a new bond. 7. Abandoned locations. If you close your location for a period of time and don't notify the DIVISION OF MOTORIST SERVICES that you are out of business, it might be assumed that you have abandoned your location. If that happens, your license will be revoked. If you intend to go out of business voluntarily it is recommended that you surrender your license, write on the back of the license that you are voluntarily surrendering your license as of a specific date, and sign your name. Be sure to notify the auctions you do business with and the tax collector's office. You will also want to notify any agencies that you have other licenses and permits with. Vehicles in your inventory that are remaining should be wholesaled or transferred into your name. Once you turn in your license, you are no longer authorized to do business. If you lose the lease to your location or sell the property, you must notify the DIVISION OF MOTORIST SERVICES as soon as possible. Without a location, you are not legally authorized to hold a license. However, the DIVISION OF MOTORIST SERVICES may work with you and allow you a few days to find a new location. They will not allow you to conduct business without a location and are under no legal obligation to allow you to hold a dealer's license. If you intend to be away from your business location for an extended period of time, you must notify the DIVISION OF MOTORIST SERVICES Regional Office. Examples of extended leaves would include long trips, family emergencies and leaves for health reasons. Seasonal licenses are not issued by the DIVISION OF MOTORIST SERVICES. 8. Changes in garage liability insurance companies. You are required to have continuous garage liability insurance coverage while you are licensed. If your policy is canceled, the insurance company may notify DIVISION OF MOTORIST SERVICES. You must then secure replacement insurance so there is no lapse in coverage. If you fail to have garage liability insurance in effect, your license may be suspended or revoked by the DIVISION OF MOTORIST SERVICES. You will also be fined $1,000! 9. Bankruptcy. A dealership undergoing either a Chapter 11 reorganization bankruptcy proceeding or a Chapter 7 liquidation bankruptcy proceeding may retain its dealer license during the course of the bankruptcy proceedings and may continue to operate as a licensed dealer. However, the bankruptcy proceeding does not protect a dealer from all of the operational and licensing requirements imposed on the dealer, or from penalties for unlawful conduct. In other words, bankruptcy does not permit a dealer from operating a business in violation of licensing laws and rules. The surety bond or irrevocable letter of credit remains in force and effect, and claims can validly be made against those bonds or letters for violations that occur after the petition for bankruptcy has been filed. You should notify the DIVISION OF MOTORIST SERVICES Regional Administrator if you have filed for bankruptcy and provide her/him with the names of your attorney and court appointed trustee. DIVISION OF MOTORIST SERVICES will assist in handling consumer complaints that may be filed. 10. Selling a business that holds a dealer license. Dealer licenses are not transferable or assignable. If you sell your business, the new owner must apply for a new license. You may negotiate a management agreement during the interim period; however, you as the licensee are responsible for all acts that occur under your license. Do not sell a business and leave your license on the wall for someone else to assume! Franchised dealers must also comply with any 16

19 applicable provisions of s , Florida Statutes. 11. Voluntary Relinquishment of a Dealer License. If you should ever decide to get out of the business and wish to voluntarily surrender your dealer license, before the DIVISION OF MOTORIST SERVICES will accept the license, you must ensure that there are no outstanding consumer complaints against your dealership; there are no pending sales transactions where payoff of trade-in vehicles or lien applications have not been made or for which application for title and registration has not been made; and either you have disposed of all your inventory or you have provided DIVISION OF MOTORIST SERVICES with a list of your remaining inventory. You are given 30 days to dispose of all remaining vehicles in inventory. If you do not abide by all of these requirements, you risk ever being able to reapply for a dealer license in the future. A new dealer will not be able to obtain a license for this location until the "Voluntary Relinquishment of License" has been fully processed. License Renewals A license is valid from the date of issue until it expires. The annual license period is May 1 through April 30 for Independent, Auction, Salvage and Wholesale dealers; January 1 through December 31 for Franchise dealers and Service Facilities associated with the franchise dealers; and October 1 through September 30 for Mobile Home and Recreational Vehicle dealers. The license period for non-resident dealers is January 1 through December 31. The renewal fee is $75.00 for Independent, Franchised, Auction, Salvage and Wholesale dealers; and $ for Mobile Home and Recreational Vehicle dealers. Mobile Home and Recreational Vehicle dealers also pay an additional $40.00 per year to the Mobile Home and Recreational Vehicle Protection Trust Fund. The renewal fee for non-resident dealers is $2,000 for each county in which the dealer operates. The law requires DIVISION OF MOTORIST SERVICES to deliver or mail to each dealer a license renewal form not less than 60 days prior to the expiration date. A dealer who files a renewal application less than 30 days before the license expiration shall cease doing business if they do not have a new license by the first day of the license period. A dealer may file a late renewal anytime during the 45 days after the expiration date; however, the dealer cannot resume business until a new license is issued. The late fee for Independent, Franchised, Auction, Salvage and Wholesale dealers is $ The late fee for Mobile Home and Recreational Vehicle Dealers is the amount of the initial application $300.00! Mobile Home and Recreational Vehicle dealers also pay an additional $40.00 per year to the Mobile Home and Recreational Vehicle Protection Trust Fund. After 45 days has elapsed, Mobile Home and Recreational Vehicle dealers who have not renewed must file an initial license application, thus starting all over again. All supplemental licenses are renewed at the same time as the main location. The fee for the renewal of supplemental locations is $50.00 per location. Record Keeping Creating and maintaining records will be one of the most important management functions that you will perform. Every government agency that has any regulatory authority over your business will require you to create and maintain records. Maintaining records is an integral part of your business and should be of paramount importance to you. The fact of the matter is that accurate 17

20 records are a necessity, not to mention a legal requirement. Furthermore, good records can keep you out of trouble with DIVISION OF MOTORIST SERVICES, other regulatory agencies, and perhaps plaintiff's attorneys! The DIVISION OF MOTORIST SERVICES has an entire program function dedicated to dealer records inspections. It is their belief, and rightly so, that if a dealer has the records required by law, then there is likelihood that the dealership is meeting its statutory obligations. You see, the records are linked to certain processes that if not being performed or are performed incorrectly, usually result in consumer complaints. Once you become a licensed dealer, you can expect that the DIVISION OF MOTORIST SERVICES Compliance Examiner/Officer will visit your business sometime during the first 3 or 4 months following licensure to review your records. The purpose of this visit is not only to ensure compliance, but also to provide an educational opportunity. Take advantage of this visit and learn what the DIVISION OF MOTORIST SERVICES expects! Records To Keep The DIVISION OF MOTORIST SERVICES is not interested in your financial records. DIVISION OF MOTORIST SERVICES is interested in records regarding vehicle ownership documents, registrations, temporary tags and odometer statements. Keep in mind, that's what the DIVISION OF MOTORIST SERVICES deals with. It issues titles and keeps track of ownership records and license plate information. As a dealer, you are entrusted to make sure that your customers' vehicles are properly titled and registered. Of course to do that, you must have a title certificate in the first place. Florida Law requires a dealer to have a duly assigned Manufacturer's Certificate of Origin (MCO) or title certificate from the time the dealer acquires a vehicle until the dealer disposes of the vehicle. This means the dealer owns the vehicle and has control over the transfer of ownership. By having the title and knowing who you sell the vehicle to, you have all the information available to enter into your records system. NOTE: All DIVISION OF MOTORIST SERVICES records must be kept for no less than five years. Every dealer must keep a book or record of all transactions consisting of: 1. The purchase, sale or exchange, or receipt for purpose of sale, of any motor vehicle. 2. The date a temporary tag was issued. 3. The date of title transfer. 4. The name and address of the purchaser. 5. The alleged owner or the person from whom such motor vehicle was purchased or received. 6. The name and address of the person to whom the motor vehicle was sold or delivered. 7. The identification number or engine number, maker's number, if any, chassis number, if any, and such other numbers or identification marks as may be thereon, and shall also include a statement that a number has been obliterated, defaced, or changed, if such is the fact. The statutes that require dealers to maintain records also provide that the DIVISION OF MOTORIST SERVICES shall prescribe or approve the form in which the records are to be maintained. However, DIVISION OF MOTORIST SERVICES has chosen to specify the data elements that must be maintained and will only suggest, rather than mandate, a specific form or format for records maintenance. A dealer may choose to keep records on electronic media but the dealer must keep and make available the source documents. This gives you flexibility with your records system. Documents themselves, as previously stated, are a source of information. Dealers are required to 18