Bonds and Business Records Flashcards

A dealer discovers a gap in their business records for a vehicle sold 2 years ago. What is the most likely consequence during a DMV audit?

Answer: A citation, fine, or license suspension depending on severity

Missing records during a DMV audit can result in citations, fines, or license suspension based on the nature and frequency of violations.

What is the 'principal' in a dealer surety bond arrangement?

Answer: The licensed dealer who purchases the bond

In surety bond terminology, the principal is the dealer who is licensed and required to obtain the bond.

For how many years after a dealer license expires or is revoked must the dealer retain business records?

Answer: 3 years

Dealers must retain required records for at least 3 years after the license expires or is revoked in California.

A wholesale-only dealer's surety bond requirement in California is typically set at what minimum amount?

Answer: $10,000

Wholesale-only dealers in California are required to carry a surety bond of at least $10,000.

Which of the following best describes a 'consecutive number system' required for dealer records?

Answer: A method for numbering all buyers' orders sequentially to prevent gaps

Dealers must assign consecutive numbers to buyers' orders to ensure an unbroken audit trail of all transactions.

A dealer's bond is in the amount of $25,000. A consumer files a valid claim for $30,000 in damages. What is the maximum the surety will pay from the bond?

Answer: $25,000 — limited to the bond amount

The surety's liability is capped at the face value of the bond; any excess must be sought directly from the dealer.

Which document in a dealer's records file would confirm the vehicle's legal ownership was properly transferred to the buyer?

Answer: Certificate of title signed over to the buyer or title application filed

The signed certificate of title or filed title application is the legal proof that ownership was properly transferred to the purchaser.