Current through August, 2024
(a) Where an
inventory or flooring line of credit cannot reasonably be obtained by a dealer,
the board may provide that a bond, for one of the following amounts, be
obtained as an alternative form of security:
(1) $200,000 for new vehicle dealers selling
ten or more new motor vehicle units a month on an annual basis;
(2) $50,000 for new vehicle dealers selling
less than ten new motor vehicle units per month on an annual basis;
(3) $100,000 for used motor vehicle dealers
selling sixty or more motor vehicle units per month on an annual
basis;
(4) $25,000 for a used motor
vehicle dealer selling less than sixty units a month on an annual basis;
and
(5) $10,000 for motorcycle and
motor scooter dealers.
(b) More than one bond may be furnished by
the same applicant, provided they aggregate the full amount prescribed by this
section.
(c) The bond must be:
(1) Executed by a surety company authorized
to do business in the State; or
(2)
Secured by a deposit of cash with the board in lieu of surety. Interest earned
on a cash deposit while in the possession of the director shall belong to the
licensee or trustee.
(d)
The bond shall be conditioned:
(1) That the
dealer will faithfully and truly comply with chapter
437, HRS, as the same now is or may
be amended, and with any rules as may be promulgated by the board pursuant to
chapter
437, HRS;
(2) That the dealer will not be guilty of
fraud, misrepresentation, or other improper business conduct in connection with
the selling, purchasing, negotiating for purchase, or otherwise dealing with
motor vehicles or any other property related thereto, and that the dealer will
satisfy all judgments rendered against the dealer based in whole or in part
upon representations or warranties made in connection with any retail sale or
negotiation for the purchase of a motor vehicle; and
(3) That the dealer will protect any
purchaser of any vehicle or any person acquiring any lien thereon or successor
in interest of any such person against any loss on account of any defect in or
undisclosed encumbrances upon the title of any motor vehicle, registered in
reliance upon any certificate, affidavit, or other representation of the
dealer, or registration or transfer of registration procured by the
dealer.
(e) Suit on
bond. The board, director of commerce and consumer affairs, or any person who
has been or claims to have been injured by the conduct of the dealer shall have
the right of action to recover on any such bond, plus a reasonable attorney's
fee (to be allowed by the court, no other attorney's fees shall be permitted
from the bond proceeds) incurred to procure the recovery under the bond, but
the aggregate liability of the surety or sureties to all such persons shall in
no event exceed the amount of the bond. Nothing in chapter
437, HRS, or the rules promulgated
pursuant thereto, shall be deemed to prohibit or prevent an independent action
against the dealer and any other person from being joined or consolidated with
an action on the bond, and the recovery of a larger amount than the amount of
the bond founded upon any other cause or causes of action so joined or
consolidated.
