DCRA Lowers Bond Requirement for Lot License

The Department of Consumer and Regulatory Affairs (DCRA) is making it easier for some used car dealers to obtain the licenses they need from the D.C. Department of Consumer and Regulatory Affairs (DCRA) in order to operate used car lots with five or more cars. 

DCRA’s final regulations* on Outdoor Storage of Motor Vehicles provide that the operator of an outdoor used car lot with five or more vehicles must file a bond or other security in the amount of $100,000, in addition to the $25,000 bond needed to operate a motor vehicle dealership.  Recent experience with these new regulations suggests that the $100,000 bond requirement may be making it impossible for many legitimate dealers to obtain the licenses they need to continue operating their used car lots.

For this reason, until further notice, DCRA will accept a $25,000 bond as satisfying the bond requirement to obtain the license needed to operate a used car lot.  As before, the bond required for a used car lot license is in addition to the $25,000 bond required for a motor vehicle dealer license.  Therefore, the total bond requirement for a motor vehicle dealer to operate a used car lot is now $50,000 instead of $125,000.  This total bond requirement may be satisfied either with two $25,000 bonds (which may be from different companies) or with one $50,000 bond.

DCRA will continue to monitor conditions at used car lots throughout the city to ensure that the new regulations protect residential neighborhoods and retail corridors from public nuisances while allowing legitimate used car dealers to stay in business.

Request for Extension of Time

On December 23, 2008, the D.C. Department of Consumer and Regulatory Affairs issued emergency regulations on Outdoor Storage of Motor Vehicles in the District of Columbia.  The final regulations were published in the D.C. Register and became effective on February 20, 2009.  See 16 DCMR § 314.  From January to April 2009, the Department conducted education and outreach to inform used car dealers about the new requirements.  Since April 20, 2009, the Department has enforced the regulations by posting Notices to Abate at non-compliant lots and towing vehicles from lots that have made little or no progress towards coming into compliance.    

The Department recognizes that, although five months have passed since these regulations were issued, some used car dealers may have been unable to make the investments or modifications necessary to come into full compliance.  To assist a dealer who is working in good faith to comply, the Director will grant – upon request and on a case-by-case basis – an extension of time, as appropriate, to give the dealer additional time.

To request extension, please DCRA Licensing Center at 202-442-4311.

• Copy of June 8, 2009 Extension of Time Memo*

Overview of Rules

New emergency regulations intended to permanently address threats to public health, safety, and comfort posed by many the District’s used car lots, including criminal activity, rodent harborages, and environmental hazards went into effect on December 23, 2008. Mayor Adrian M. Fenty said these new regulations will once again allow the city’s commercial corridors to thrive.

The emergency regulations, published in the District of Columbia Register on January 2, 2009, strengthen the business licensing requirements for dealers and salespersons, limit the number of vehicles that can be stored outdoors in commercial zones, require a permanent structure on all lots, and limit the number of salesmen based on the size of the lot, among others.

DCRA is reaching out to dealers and the public to inform them of the new regulations and encourage voluntary compliance and will commence enforcement of the regulations against car lot operators on April 20, 2009. DCRA is holding a public forum on April 9, 2009 to discuss options for coming into compliance before the deadline.

DCRA will update the license requirements at its Business License Information Center as soon as possible.

• New Regulations as Published in the DC Register on January 2, 2009*

New Regulations in Effect:

• Outdoor storage of five or more vehicles now requires the posting of a $100,000 bond.  Before the addition of these new regulations, a bond was not required.
• An outdoor car lot with five or more vehicles requires a new kind of license: a basic business license, with a Motor Vehicle Sales, Service, and Repair license endorsement for a Used Car Lot. The fee for this license is $1,000.00, and only one license is available per lot. This license is required in addition to a basic business license, with a Motor Vehicle Sales, Service, and Repair license endorsement, for a Motor Vehicle Dealer. Before the addition of these new regulations, this license was not required.
• Outdoor storage of motor vehicles by used car dealers are now only permitted in Commercial-Light Manufacturing Districts (C-M) and General Industry Districts (M). In all other zoning districts, including Commercial Districts (C-1, C-2, C-3, C-4, and C-5), a used car dealer can keep up to four vehicles outdoors. The dealer must keep all other vehicles inside a permanent garage or permanent building.
• Each outdoor car lot must have an office in a permanent building of at least 250 square feet, with heating, electricity, and a bathroom connected to water and sewer lines.
• New requirements for paving of parking areas, marking of parking spaces, minimum space size, signage, curbing or fencing, and landscaping.
• The regulations also require that lots be open to the public during regular business hours and that most vehicles stored or displayed outdoors be offered for retail sale and display completed Federal Trade Commission Buyers Guides. Outdoor lots may not be used for storage of disassembled or junk vehicles, and any car parts or trash must be kept off the ground in secured containers.
• There will be two new categories of salesmen licenses. Used car dealers who maintain outdoor lots must ensure that all Motor Vehicle Salesman licenses issued for the lot be either “Seller Only” or “Buyer and Seller” licenses. In addition, only one salesman license per 3,000 square feet of lot space may be a “Buyer and Seller” license. All Motor Vehicle Salesman licensees must be employees of the lot’s Motor Vehicle Dealer. The requirements will be posted on the BBL category list as soon as possible.
• Dealers need to ensure that at least 70 percent of the motor vehicles stored or displayed at an outdoor car lot are offered for sale and sold at the lot. Vehicle purchase and sale records must be kept on the lot and made available for immediate inspection by DCRA during regular business hours.