NC General Statutes

N.C. Gen. Stat. § 20-288 (2026)

Application for license; license requirements; expiration of license; bond

✓ current as of July 2026

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(a) A new motor vehicle dealer, motor vehicle sales representative, manufacturer, factory branch, factory representative, distributor, distributor branch, distributor representative, or wholesaler may obtain a license by filing an application with the Division. An application must be on a form provided by the Division and contain the information required by the Division. An application for a license must be accompanied by the required fee. The following requirements also apply to applicants under this section:

(1) An application for a new motor vehicle dealer license must be accompanied by an application for a dealer license plate. In addition, the Division shall require each applicant for a new motor vehicle dealer license to certify on the application whether the applicant or any parent, subsidiary, affiliate, or any other entity related to the applicant is a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative. In the event the applicant indicates on the application that the applicant or any parent, subsidiary, affiliate, or any other entity related to the applicant is a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative, the Division shall not issue a motor vehicle dealer license to the applicant until all of the following conditions are satisfied:

a. The applicant states on the application the specific exception or exceptions to the prohibition on the issuance of a motor vehicle dealer license to any manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative for which the applicant contends it qualifies under G.S. 20-305.2(a).

a1. Upon receipt of a motor vehicle dealer license application by a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative, the Division shall promptly publish notice of the license application in the North Carolina Register. The notice shall include the applicant's name, address, application date, and the names and titles of any individual listed on the application as an owner, partner, member, or officer of the applicant. The notice shall also include the specific exception or exceptions to the prohibition on the issuance of a motor vehicle dealer license to any manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative for which the applicant contends it qualifies under G.S. 20-305.2(a) that are included on the license application.

b. If the applicant does not currently hold a motor vehicle dealer license issued by the Division, the Commissioner determines, after an evidentiary hearing held no earlier than 30 days from the date of publication of the notice required in sub-subdivision a1. of this subdivision, that the applicant qualifies under one or more of the exceptions to the prohibition against the issuance of a motor vehicle dealer license to any manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative provided in G.S. 20-305.2(a). The applicant shall bear the burden of proving the applicant's qualification for the exception or exceptions claimed.

(2) Upon receipt of a license application by a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative that has not previously been issued a license by the Division, the Division shall promptly publish notice of the license application in the North Carolina Register. The notice shall include the applicant's name, address, application date, and the names and titles of any individual listed on the application as an owner, partner, member, or officer of the applicant. The Division shall not approve or issue any license for a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative earlier than 15 days from the date the notice of the license or license renewal application was published in the North Carolina Register.

(a1) A used motor vehicle dealer may obtain a license by filing an application, as prescribed in subsection (a) of this section, and providing the following:

(1) The required fee.

(2) Proof that the applicant, within the last 12 months, has completed a 12-hour licensing course approved by the Division if the applicant is seeking an initial license and one six-hour course approved by the Division for each year of the licensing period immediately preceding the renewal if the applicant is seeking a renewal license. The requirements of this subdivision do not apply to a used motor vehicle dealer the primary business of which is the sale of salvage vehicles on behalf of insurers or to a manufactured home dealer licensed under G.S. 143-143.11 who complies with the continuing education requirements of G.S. 143-143.11B. The requirement of this subdivision does not apply to persons age 62 or older as of July 1, 2002, who are seeking a renewal license. This subdivision also does not apply to an applicant who holds a license as a new motor vehicle dealer as defined in G.S. 20-286(13) and operates from an established showroom located in an area within a radius of 30 miles around the location of the established showroom for which the applicant seeks a used motor vehicle dealer license. An applicant who also holds a license as a new motor vehicle dealer may designate a representative to complete the licensing course required by this subdivision.

(3) If the applicant is an individual, proof that the applicant is at least 18 years of age and proof that all salespersons employed by the dealer are at least 18 years of age.

(4) The application for a dealer license plate.

(5) A certification as to whether the applicant or any entity having any common ownership or affiliation with the applicant is a motor vehicle manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative. In the event the applicant indicates on the application that the applicant or any parent, subsidiary, affiliate, or any other entity related to the applicant is a manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative, the applicant shall be required to state whether the applicant contends it qualifies for a motor vehicle dealer's license in accordance with any of the exceptions to the prohibition on the issuance of a motor vehicle dealer's license to any manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative, as provided in G.S. 20-305.2(a).

(b) The Division shall require in such application, or otherwise, information relating to matters set forth in G.S. 20-294 as grounds for the refusing of licenses, and to other pertinent matters commensurate with the safeguarding of the public interest, all of which shall be considered by the Division in determining the fitness of the applicant to engage in the business for which he seeks a license. The Division shall not require submission of an applicant's fingerprints to be used in performing a criminal history record check of an applicant for a license or license renewal.

(b1) The Division shall require in such license application and each application for renewal of license a certification that the applicant is familiar with the North Carolina Motor Vehicle Dealers and Manufacturers Licensing Law and with other North Carolina laws governing the conduct and operation of the business for which the license or license renewal is sought and that the applicant shall comply with the provisions of these laws, with the provisions of Article 12 of Chapter 20 of the General Statutes, and with other lawful regulations of the Division.

(b2) For a licensed dealer, a change in ownership is not grounds for denial, suspension, or revocation of a license, as long as any new owner is otherwise qualified for licensure and approved by the Division. The licensee shall be considered by the Division to be a continuing business for purposes of renewal and shall not be required to apply for a license as a new business.

(c) All licenses that are granted shall be for a period of two years unless sooner revoked or suspended. The Division shall vary the expiration dates of all licenses that are granted so that an equal number of licenses expire at the end of each month, quarter, or other period consisting of one or more months to coincide with G.S. 20-79(c).

(d) To obtain a license as a wholesaler, an applicant who intends to sell or distribute self-propelled vehicles must have an established office in this State, and an applicant who intends to sell or distribute only trailers or semitrailers of more than 2,500 pounds unloaded weight must have a place of business in this State where the records required under this Article are kept.

To obtain a license as a motor vehicle dealer, an applicant who intends to deal in self-propelled vehicles must have an established salesroom in this State, and an applicant who intends to deal in only trailers or semitrailers of more than 2,500 pounds unloaded weight must have a place of business in this State where the records required under this Article are kept.

An applicant for a license as a manufacturer, a factory branch, a distributor, a distributor branch, a wholesaler, or a motor vehicle dealer must have a separate license for each established office, established salesroom, or other place of business in this State. An application for any of these licenses shall include a list of the applicant's places of business in this State.

(e) Each applicant approved by the Division for license as a motor vehicle dealer, manufacturer, factory branch, distributor, distributor branch, or wholesaler shall furnish a corporate surety bond or cash bond or fixed value equivalent of the bond. The amount of the bond for an applicant for a motor vehicle dealer's license is fifty thousand dollars ($50,000) for one established salesroom of the applicant and twenty-five thousand dollars ($25,000) for each of the applicant's additional established salesrooms. The amount of the bond for other applicants required to furnish a bond is fifty thousand dollars ($50,000) for one place of business of the applicant and twenty-five thousand dollars ($25,000) for each of the applicant's additional places of business.

A corporate surety bond shall be approved by the Commissioner as to form and shall be conditioned that the obligor will faithfully conform to and abide by the provisions of this Article and Article 15. A cash bond or fixed value equivalent thereof shall be approved by the Commissioner as to form and terms of deposits as will secure the ultimate beneficiaries of the bond; and such bond shall not be available for delivery to any person contrary to the rules of the Commissioner. Any purchaser of a motor vehicle, including a motor vehicle dealer, who shall have suffered any loss or damage by the failure of any license holder subject to this subsection to deliver free and clear title to any vehicle purchased from a license holder or any other act of a license holder subject to this subsection that constitutes a violation of this Article or Article 15 of this Chapter shall have the right to institute an action to recover against the license holder and the surety. Every license holder against whom an action is instituted shall notify the Commissioner of the action within 10 days after served with process. Except as provided by G.S. 20-288(f) and (g), a corporate surety bond shall remain in force and effect and may not be canceled by the surety unless the bonded person stops engaging in business or the person's license is denied, suspended, or revoked under G.S. 20-294. That cancellation may be had only upon 30 days' written notice to the Commissioner and shall not affect any liability incurred or accrued prior to the termination of such 30-day period. This subsection does not apply to a license holder who deals only in trailers having an empty weight of 4,000 pounds or less. This subsection does not apply to manufacturers of, or dealers in, mobile or manufactured homes who furnish a corporate surety bond, cash bond, or fixed value equivalent thereof, pursuant to G.S. 143-143.12.

(f) A corporate surety bond furnished pursuant to this section or renewal thereof may also be canceled by the surety prior to the next premium anniversary date without the prior written consent of the license holder for the following reasons:

(1) Nonpayment of premium in accordance with the terms for issuance of the surety bond; or

(2) An act or omission by the license holder or his representative that constitutes substantial and material misrepresentation or nondisclosure of a material fact in obtaining the surety bond or renewing the bond.

Any cancellation permitted by this subsection is not effective unless written notice of cancellation has been delivered or mailed to the license holder and to the Commissioner not less than 30 days before the proposed effective date of cancellation. The notice must be delivered by certified mail or electronic means to the license holder at its last known address. The notice must state the reason for cancellation. Cancellation for nonpayment of premium is not effective if the amount due is paid before the effective date set forth in the notice of cancellation. Cancellation of the surety shall not affect any liability incurred or accrued prior to the termination of the 30-day notice period.

(g) A corporate surety may refuse to renew a surety bond furnished pursuant to this section by giving or mailing written notice of nonrenewal to the license holder and to the Commissioner not less than 30 days prior to the premium anniversary date of the surety bond. The notice must be delivered by certified mail or electronic means to the license holder at its last known address. Nonrenewal of the surety bond shall not affect any liability incurred or accrued prior to the premium anniversary date of the surety bond. (1955, c. 1243, s. 4; 1975, c. 716, s. 5; 1977, c. 560, s. 2; 1979, c. 254; 1981, c. 952, s. 3; 1985, c. 262; 1991, c. 495, s. 1; c. 662, s. 3; 1993, c. 440, s. 3; 1997-429, s. 1; 2001-345, s. 2; 2001-492, s. 4; 2003-254, s. 2; 2004-167, s. 9; 2004-199, s. 59; 2005-99, s. 2; 2006-105, s. 2.3; 2006-191, s. 1; 2006-259, s. 12; 2011-290, ss. 1, 2; 2017-148, s. 1; 2019-125, s. 11; 2020-77, s. 5(a); 2023-116, s. 9(a); 2024-30, s. 27(a); 2025-47, s. 2.)

Notes of Decisions

Cited in 16 cases, 1980–2020 · leading case: Tomlinson v. Camel City Motors, Inc., 408 S.E.2d 853 (N.C. 1991).

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Tomlinson v. Camel City Motors, Inc., 408 S.E.2d 853 (N.C. 1991). · cites it 100× “The defense of limitation of liability of the surety, provided for in N.C.G.S. § 20-288, was not relevant to the principal or the underlying action.”

Reg'l Acceptance Corp. v. Old Repub. Sur. Co., 577 S.E.2d 391 (N.C. Ct. App. 2003). · cites it 14× “(“Forsyth”) pursuant to N.C. Gen. Stat. § 20-288 (e) (2001). On 2 February 1994, Regional and Forsyth entered into an agreement (“Agreement”) for Regional to purchase vehicle *681 financing contracts from Forsyth.”

Triplett v. James, 262 S.E.2d 374 (N.C. Ct. App. 1980). · cites it 8× “G.S. 20-288(e) provides that, Each applicant approved by the Division for license as a motor vehicle dealer .”

George v. Hartford Accident & Indem. Co., 412 S.E.2d 43 (N.C. 1992). · cites it 9× “Ohio Casualty was surety for Central Carolina Truck Sales (Central Carolina), the principal, under a motor vehicle dealer surety bond governed by N.C.G.S. § 20-288(e). Id. That statute requires motor vehicle dealers like Central Carolina to furnish a corporate surety bond for…”

NCNB Nat'l Bank v. W. Sur. Co., 364 S.E.2d 675 (N.C. Ct. App. 1988). · cites it 7× “G.S. 20-288(e), thereby entitling plaintiff to recover against defendant surety on the bonds, (2) it is not a volunteer to the extent that it would be precluded from pursuing its subrogation rights against defendant, (3) public policy favors recovery pursuant to N.”

Taylor v. Johnson, 351 S.E.2d 831 (N.C. Ct. App. 1987). · cites it 7× “The Triplett court reasoned that, although the contract purported to indemnify “any person” aggrieved by fraud, the bond was clearly obtained in order to meet the requirements of G.S. 20-288. That statute states in pertinent part: Any purchaser of a motor vehicle who shall have…”

Krause v. RK Motors, LLC, 797 S.E.2d 335 (N.C. Ct. App. 2017). · cites it 3× “Krause also asserted as the sixth count his right to recover from either RK Motors or Western Surety Company pursuant to N.C.G.S. § 20-288(e). Put simply, Krause alleged that he relied on RK Motors' false representations in deciding to purchase the Nova and that he could not…”

Fink v. Stallings 601 Sales, Inc., 307 S.E.2d 829 (N.C. Ct. App. 1983). · cites it 3× “We hold that Citicorp is not a “purchaser” under the common and ordinary meaning of the word, and is, therefore, not entitled to recover under G.S. 20-288. Affirmed. Judges Phillips and Eagles concur.”

Randolph Cnty. v. Coen, 394 S.E.2d 256 (N.C. Ct. App. 1990). · cites it 2× “While the trial court determined that no vehicles were placed on the lot until after 6 July 1987, this finding is not determinative in deciding whether or not defendants had substantially begun their operations prior to the effective date of the Ordinance.”

Mawyer v. Lumbermens Mut. Cas. Co., 377 S.E.2d 401 (Va. 1989). “” N.C. Gen. Stat. § 20-288 (e) (1985). The bond, on its face, refers to the North Carolina Statute.”

Tomlinson v. Camel City Motors, Inc., 399 S.E.2d 147 (N.C. Ct. App. 1991). · cites it 2× “The statute requiring the furnishing of a surety bond by car dealers is N.C. Gen. Stat. § 20-288 , which provides: Any purchaser of a motor vehicle who shall have suffered any loss or damage by any act of a motor vehicle dealer that constitutes a violation of this Article or…”

Ferris v. Haymore, 967 F.2d 946 (1992). · cites it 16× “” In the present case, the dealer did not pay the plaintiff’s monthly car payments as required by their agreement.”

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— N.C. Gen. Stat. § 20-288(d) — 1 case

Volvo Grp. N. Am., LLC v. Roberts Truck Ctr., Ltd., 2020 NCBC 28 (N.C. Bus. Ct. 2020).

— N.C. Gen. Stat. § 20-288(e) — 10 cases

Tomlinson v. Camel City Motors, Inc., 408 S.E.2d 853 (N.C. 1991). “The defense of limitation of liability of the surety, provided for in N.C.G.S. § 20-288, was not relevant to the principal or the underlying action.”

Triplett v. James, 262 S.E.2d 374 (N.C. Ct. App. 1980). “G.S. 20-288(e) provides that, Each applicant approved by the Division for license as a motor vehicle dealer .”

George v. Hartford Accident & Indem. Co., 412 S.E.2d 43 (N.C. 1992). “Ohio Casualty was surety for Central Carolina Truck Sales (Central Carolina), the principal, under a motor vehicle dealer surety bond governed by N.C.G.S. § 20-288(e). Id. That statute requires motor vehicle dealers like Central Carolina to furnish a corporate surety bond for…”

NCNB Nat'l Bank v. W. Sur. Co., 364 S.E.2d 675 (N.C. Ct. App. 1988). “G.S. 20-288(e), thereby entitling plaintiff to recover against defendant surety on the bonds, (2) it is not a volunteer to the extent that it would be precluded from pursuing its subrogation rights against defendant, (3) public policy favors recovery pursuant to N.”

Krause v. RK Motors, LLC, 797 S.E.2d 335 (N.C. Ct. App. 2017). “Krause also asserted as the sixth count his right to recover from either RK Motors or Western Surety Company pursuant to N.C.G.S. § 20-288(e). Put simply, Krause alleged that he relied on RK Motors' false representations in deciding to purchase the Nova and that he could not…”

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