How to Get a Used Car Dealer's License in Massachusetts
To sell used cars in the state of Massachusetts, you must fulfill requirements set forth by the local dealer's licensing board that has jurisdiction over the city where the dealership will be located. Each city in Massachusetts has slightly different requirements to obtain a class II dealer's license, required for dealers selling used vehicles. Each jurisdiction can also set their own fee for used-car dealers, so long as it doesn't exceed $200.
Register or incorporate your business in the state of Massachusetts. If incorporated, a copy of your articles of incorporation must be submitted as with your dealer's license application. If you registered a business as a sole proprietorship or partnership with the city, proof of registration must be submitted. To register your business, contact the local city clerk's office. To incorporate, contact the Massachusetts Secretary of the Commonwealth.
Complete a worker's compensation insurance affidavit, which informs the city that you have or will have employees. If you don't have employees, or plan to have employees in the future, indicate that on the same form. If employing others, submit a copy of your worker's compensation insurance policy declaration page which shows the policy's number and the policy's date of expiration. To obtain worker's compensation insurance, contact the Department of Industrial Accidents.
Provide property background information. Provide a copy of the lease for leased properties. Obtain a copy of the property deed for owned lots. If you are in the process of purchasing a used dealership, the seller of the dealership must submit a letter indicating that he has agreed to sell the dealership to you. A floor plan or vehicle lot plan may also be required.
The property must be inspected by the local building department. Once the property is inspected, the building department may issue two different documents – a certificate of good standing and an engineering department inspection form. An inspection with the fire prevention bureau may also need to be completed. The fire department may inspect the lot based on the recommendation of the licensing commission.
Obtain a surety bond in the amount of $25,000. The purpose of the surety bond is to protect consumers in the lieu of a fraudulent transaction, and provide assistance to you, the dealer, in case you are sued by a consumer. A surety bond can be obtained from an insurance agency that provides commercial insurance lines.
Complete and submit an application and include all materials which includes property information and inspections, Articles of Incorporation or proof of business registration, surety bond and all other required information. An application can be obtained from the local city clerk's office. The application typically requires the full names of all partners involved, the address of business owner(s), social security numbers and dealership name and address.
Some jurisdictions may require that you complete a form that gives the city permission to complete a background check. The city may also want you to submit financial information such as the names of other business you own or owned in the past, bank accounts and personal or business savings. The application fee ranges per jurisdiction. In the city of Northampton, for example, the application for a class II dealer's license is $200 as of April 2019.