Every automotive dealership in Iowa requires licensing by the Iowa Department of Transportation (DOT). Anyone that sells more than six vehicles within 12 months should be licensed because they are engaged in the business of selling cars. Further, anyone that is buying cars for the sole purpose of reselling them should also have a dealer’s license.
Acquiring a dealer’s license involves meeting the requirements, paying the licensing fees, and possibly attending licensure training. Dealers should have an office with a telephone where regular business hours are maintained, a repair facility with minimum space and equipment to repair at least one vehicle, and a display facility. Display facilities for new motor vehicle dealers should be indoors, with a space that is at least 18 feet by 30 feet. Used automotive dealers can have either an indoor or an outdoor display facility, with the same space requirements as the new automotive dealers. Automotive dealerships also have specific insurance requirements, including a $50,000 surety bond that must be filed with the Iowa DOT and minimum liability requirements.
Dealers also need to pay licensing fees. Currently, licensing fees are $70 for each principle place of business in each city. The fee covers a two-year period that expires on December 31 of even-numbered years. Therefore, it is possible to be covered for only part of the two-year period, but still have to pay the full $70 license fee. There is also a $20 fee for each extension lot. An extension lot is a lot that is not connected to the main dealership or the principle place of business, but is still located in the same town or city. There is also a registration fee of another $70. Additionally, dealerships need to pay for each dealer license plate that they require, which costs another $40 each.
Finally, used-car dealers are also required to attend a dealer licensure-training program. The program is a minimum of eight (8) hours, but some franchised dealerships are not required to attend this training. At least one person from the dealership such as an owner, officer, member, or partner must attend the training. The training is offered through the Iowa Independent Automobile Dealers Association, and classes are generally offered monthly. A five-hour refresher course is also required every two years prior to dealer license renewal.
Once you have jumped through all of the hoops to get your license, the State of Iowa allows you to sell vehicles at your main dealership and extension lots. Dealers can also display vehicles at fairs, shows, and exhibitions as long as they have a temporary permit issued by the Iowa DOT (along with another $10 fee). Dealers can offer vehicles for sale at such events, but the sale has to actually take place at the dealer’s principle place of business. Dealers can only sell vehicles at events that are located within the automobile dealer’s community. For franchised dealers, a community is usually defined in the franchise agreement as their area of responsibility.
The aforementioned summary is a quick overview of the licensure requirements in Iowa; it is not meant to be an exhaustive list of requirements. If you have questions about licensure requirements, fees, or what your license allows you to do in Iowa, contact the knowledgeable professionals at Arenson Law Group, PC. Arenson Law Group, PC, are car dealer law experts and can assist you with any of your dealership’s legal questions. Call us today at 319-363-8199