Handling Utah DMV bond claims as a surety requires a strategic approach to evaluating liability, managing risk, and ensuring compliance with state regulations. Sureties must carefully assess the validity of claims, verify dealer obligations, and navigate statutory deadlines to avoid unnecessary payouts. This article outlines six key considerations for sureties when evaluating claims upon a Utah DMV bond or, more accurately, a Utah MVED bond claim.
Consideration Number 1: RTB (Read the Bond!):
The Utah DMV bond form, MVED-1, is mandated by the Utah Motor Vehicle Enforcement Division (“MVED”) and approved by the Utah attorney general’s office. It mirrors the provisions of the bond statute and sets forth the surety’s obligations thereunder. You cannot evaluate a claim if you don’t know what’s covered and a wise person checks the record. Don’t rely on memory.
Consideration Number 2: Is the claim covered?:
The bond covers claims for:
- fraud;
- fraudulent representation;
- violating Utah Code § 41-3-301(1) which requires a dealer to submit or deliver a certificate of title or manufacturer’s certificate of origin; and
- violating Utah Code § 41-3-402(1) which requires payoff of liens on motor vehicles traded in.
If the claim does not fall cleanly into one of these categories, then there could be sufficient grounds for denial. However, evaluating whether a specific fact pattern constitutes fraud or any of the above-categories could each be the subject of its own article.
Consideration Number 3: Was the bond in effect when the claim arose?
It’s simple, but the easiest answers are often the ones we overlook.
Consideration Number 4: If relevant, did the dealer meet their statutory deadlines?
● If a vehicle was paid for in full, the dealer has 15 days from the date of sale to pay off any liens on a trade-in;
● If a vehicle was paid for in full, the dealer has 15 days from the date of sale to pay off any liens on a trade-in;
● If a vehicle sale is financed, the dealer has 21 days from the date of sale to pay off any liens on a trade-in;
● The dealer must provide title within 45 days of the sale.
Consideration Number 5: Did the claimant meet their statutory deadlines?
● Before filing suit against the bond, the claimant must first file a complaint with the Utah MVED within one year after the cause of action arose;
● After filing the complaint with the administrator of Utah MVED, any lawsuit must be filed within two years.
Consideration Number 6: The surety’s statutory deadlines:
The surety can’t make any payments until 6 months after the first written claim was received by the surety. After the 6 months is up, the surety must:
- Assess the validity of all claims on the bond; and
- Submit a distribution plan for all valid claims, pro rata if total valid claims are over the penal sum.
If the distribution plan is not approved by all valid claimants and the total valid claims exceeds the penal sum, the surety must file an interpleader action.
Managing Utah MVED bond claims requires a thorough understanding of the legal framework and application of that framework to the specific details of each claim. By carefully reviewing the bond, confirming coverage, ensuring the bond was in effect, and considering the statutory deadlines for all parties involved, sureties can better navigate the claims process and minimize potential risks. The Faux Law Group is available to assist should any questions or concerns arise.
