Legislation is being passed in sessions around the country, and two states in particular have passed some new legislation that impacts bonding requirements. Texas auto dealers and South Carolina pawnbrokers may find themselves impacted by these developments.
Texas: Increasing Security Requirement for Motor Dealers
Texas House Bill 3533, which will go into effect September 1, 2021, states that the Texas Department of Motor Vehicles 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, among other materials, a properly executed surety bond in the amount of $50,000 (previously $25,000).
The bill additionally states that a dealer should post notice of the surety bond and procedure by which a claimant may recover against it in the same manner as the dealer’s general distinguishing number is posted, so the department may then post it on its website.
This requirement applies only to applications for the issuance or renewal of a motor vehicle dealer general distinguishing number (or a wholesale motor vehicle auction general distinguishing number) submitted on or after the September 1, 2021 effective date.
South Carolina: Pawnbroker Bond Amount Increase
As of July 1, 2021, pawnbrokers in South Carolina will be required to post $16,275 surety bonds (previously $15,000). The South Carolina General Assembly passed Act No. 262 in 2016, which amended the South Carolina Pawnbrokers Act to provide for dollar amount adjustments periodically. Per this Act, designated dollar amounts are subject to adjustments based on changes in the Consumer Price Index for All Urban Consumers every five years beginning July 1, 2021.
As of 2016, applicants are no longer allowed to post a letter of credit, a certificate of deposit, or other form of financial responsibility; only a surety bond will be accepted by the South Carolina Secretary of State. The bond must also be issued by one surety company and can no longer be issued by two sureties. In addition, pawnbrokers must provide proof of adequate insurance covering the loss of pledged (pawned) items.
More information on licensing for pawnbrokers, previous increases in bond amounts, and relevant legislation can be found here.
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