Motor Vehicle Dealers, Reconditioners, Rebuilders, and Wholesalers.

Ala. Code tit. 40, ch. 12, art. 8

in effect

Ala. Code § 40-12-390 Definitions.

40-12-390. Definitions. The following words and phrases, when used in this article, shall have the following meanings: (1) COMMISSIONER. The state Commissioner of Revenue. (2) DEPARTMENT. The Department of Revenue. (3) DISTRIBUTOR. Any person engaged in the business of selling or distributing new motor vehicles to new motor vehicle dealers. (4) FACILITATOR. Any person or his or her designee who facilitates an off-site sale licensed under Section 40-12-395. The term may include the owner of the property where the off-site sale is being conducted. (5) MANUFACTURER. Any person engaged in the business of manufacturing or assembling new and unused motor vehicles. (6) MASTER DEALER LICENSE. The license issued by the department pursuant to this article. (7) MOTOR VEHICLE. Any motor vehicle as defined in Section 40-12-240, but the term shall not include any trailer not required to have a certificate of title. (8) MOTOR VEHICLE REBUILDER. Any person engaged in the business of making or causing to be made extensive repairs, replacements, or combination of different motor vehicles to the extent of extinguishing the identity of the original vehicle to the extent that the finished motor vehicle may be assigned a new identification to be issued by the department under Chapter 8 of Title 32. The term also includes any person engaged in the business of refurbishing, repairing, or replacing damaged parts of motor vehicles for the purpose of preparing the vehicle for resale under the same identification and identity as the vehicle had before the refurbishing. (9) MOTOR VEHICLE WHOLESALER. Any person engaged in the business of buying, selling, or exchanging motor vehicles at wholesale to motor vehicle dealers, as defined in this article, and not to the public. (10) NEW MOTOR VEHICLE. A motor vehicle, other than a used motor vehicle, the legal title of which has never been transferred by a manufacturer, distributor, or new motor vehicle dealer to an ultimate purchaser. (11) NEW MOTOR VEHICLE DEALER. Any person that holds a bona fide contract or franchise in this state in effect with a manufacturer or distributor of new motor vehicles and is engaged in the business of selling, advertising, or negotiating the sale of new motor vehicles or new and used motor vehicles, and the duly licensed new motor vehicle dealers shall be the sole and only persons entitled, other than in connection with the rental or leasing of new motor vehicles by persons engaged in the business of motor vehicle rental and leasing, to sell and publicly or otherwise solicit and advertise for sale new motor vehicles. The term also includes a motor vehicle rebuilder and motor vehicle wholesaler as defined in this article. (12) PERMANENT LOCATION. A building or structure from which sales of motor vehicles are conducted. The building or structure must be owned, rented, or leased and must be used as an office and a place to receive mail, keep records, and conduct routine business, to include utilities under the name of the licensed business or the business owner. (13) PERSON. As defined in Section 40-12-240. (14) USED MOTOR VEHICLE. A motor vehicle, the legal title of which has been transferred by a manufacturer, distributor, or new motor vehicle dealer to an ultimate purchaser. (15) USED MOTOR VEHICLE DEALER. Any person engaged in the business of buying, selling, exchanging, advertising, or negotiating the sale of five or more motor vehicles, not previously titled or registered in the person’s name, at retail during a calendar year or in offering or displaying motor vehicles for sale at retail to the public. The term “selling” or “sale” shall include lease-purchase transactions. The term “used motor vehicle dealer” does not include banks, credit unions, licensees of the State Banking Department, and finance companies which acquire motor vehicles as an incident to their regular business and does not include motor vehicle rental and leasing companies. The term also includes a motor vehicle rebuilder and motor vehicle wholesaler as defined in this article. (16) ULTIMATE PURCHASER. With respect to a new motor vehicle, the first person, other than a new motor vehicle dealer purchasing in his or her capacity as a new motor vehicle dealer, who in good faith purchases the new motor vehicle for purposes other than resale. The term does not include a person who purchases a vehicle for purposes of altering or remanufacturing the motor vehicle for future resale. (Acts 1978, No. 539, p. 597, §1; Acts 1991, No. 91-321, p. 595, §1; Acts 1995, No. 95-727, p. 1553, §1; Act 2004-534, p. 1126, §1; Act 2012-561, p. 1660, §1; Act 2014-158, p. 445, §2; Act 2019-244, §1.)

Ala. Code § 40-12-391 License - Generally.

40-12-391. License - Generally. (a) No person shall be licensed as a motor vehicle dealer under Section 40-12-51, 40-12-62, or 40-12-169, nor shall any person engage in business as, serve in the capacity of, or act as a new motor vehicle dealer, used motor vehicle dealer, motor vehicle rebuilder, or motor vehicle wholesaler in this state, without first obtaining a master dealer license as provided in this article and, if a new motor vehicle dealer or a used motor vehicle dealer, a state sales tax number. (b) No person shall engage in the business of buying, selling, exchanging, advertising, or negotiating the sale of new motor vehicles unless he or she holds a valid master dealer license as a new motor vehicle dealer in this state for the make or makes of new motor vehicles being bought, sold, exchanged, advertised, or negotiated or unless a bona fide employee or agent of the licensee. (c) No person, other than a motor vehicle dealer licensed under this article or a recorded lienholder, may sell a motor vehicle without being currently recorded as the owner or lienholder on the certificate of title or designated as the attorney-in-fact acting on behalf of the titled owner or lienholder. If a person is not in compliance with this subsection, any state or local licensing official or law enforcement officer may impound the motor vehicle until the person provides proper proof of ownership as the currently recorded owner on the certificate of title or as the attorney-in-fact acting on behalf of the titled owner, or as otherwise prescribed by law. This subsection does not apply to abandoned motor vehicles sold under Chapter 13 of Title 32. (d) Notwithstanding any law of this state providing otherwise, neither a new motor vehicle dealer nor a used motor vehicle dealer nor any person engaged in the business of motor vehicle rental and leasing: (1) With respect to a credit sale transaction, is required to be licensed under Chapter 19 of Title 5 in order to pay any amount necessary to satisfy a lease on, security interest in, or lien on any motor vehicle either returned to that dealer or to the lessor or traded in by the purchaser in connection with the credit sale transaction, and to include that amount as part of the amount to be paid by the purchaser under the credit sale transaction; or (2) With respect to a lease transaction, is subject to Chapter 19 of Title 5 or otherwise deemed to have made a loan or credit sale by virtue of paying any amount necessary to satisfy a lease on, security interest in, or lien on any motor vehicle either returned to that dealer or to the original lessor or traded in by the lessee in connection with the lease transaction, and including that amount as part of the amount to be paid by the lessee under the lease transaction. (Acts 1978, No. 539, p. 597, §2; Acts 1991, No. 91-321, p. 595, §1; Acts 1995, No. 95-727, p. 1553, §1; Act 99-398, p. 661, §1; Act 2014-158, p. 445, §2; Act 2019-244, §1.)

Ala. Code § 40-12-392 License - Applications; Inspection of Records; Restrictions on Sales; Liability Insurance.

40-12-392. License - Applications; Inspection of Records; Restrictions on Sales; Liability Insurance. (a) The application for a master dealer license shall be in such form and shall be subject to such rules as may be prescribed by the commissioner. An application shall be verified by the oath or affirmation of the applicant. If the applicant is a sole proprietorship, the application shall contain the name and residence of the applicant. If the applicant is a partnership, the application shall contain the names and residences of each partner. If the applicant is a corporation, the application shall contain the names and residences of the officers and directors. If the applicant is a new motor vehicle dealer, or used motor vehicle dealer in this state, the application shall contain the state sales tax number assigned to the applicant. The application shall enumerate the number of new and used vehicles sold during the previous calendar year; describe the exact location of the place of business, and shall state: That the location is a permanent one; that the location affords sufficient space upon and within which to adequately display one or more motor vehicles offered for sale and that an appropriate sign designates the location as being the place of business of a motor vehicle dealer; and that it is a suitable place from which the applicant can in good faith carry on such business and keep and maintain books and records necessary to conduct business, which shall be available at all reasonable hours for inspection by the commissioner. The application shall state that the applicant is either (i) franchised by a manufacturer of motor vehicles, and, if so, the name of the manufacturer and line make that the applicant is authorized to represent, or (ii) a used motor vehicle dealer, rebuilder, or wholesaler. Upon making application, the person applying shall pay an application fee of twenty-five dollars ($25) through September 30, 2020. Effective October 1, 2020, the application fee shall be calculated pursuant to Section 40-12-392.1 and shall be in addition to other fees required by law. The commissioner may cause an investigation to be made and upon being satisfied that the facts set forth in the application are true, shall issue a master dealer license certificate to the applicant, which shall entitle the licensee to operate as a motor vehicle dealer, rebuilder, and wholesaler for one year from the first day of October of each year. If the commissioner, upon investigation, determines that a master dealer license should not be issued, the commissioner may deny the license and the applicant may appeal the denial to the Alabama Tax Tribunal as allowed in Chapter 2A of this title. (b) Every master dealer license issued under this article shall be valid for one year from the first day of October of each year and shall be renewed on October 1 each year. Thirty days of grace for obtaining the license shall be allowed without penalty. Thereafter, penalties prescribed under this article for delinquent licenses shall be imposed. (c) New and used motor vehicle dealers, motor vehicle rebuilders, and motor vehicle wholesalers shall be required to maintain blanket motor vehicle liability insurance coverage on vehicles operated on the public streets and highways of this state, including vehicles in dealership inventory. Evidence of liability insurance for business and inventory vehicles shall be filed with the application for license, and the application for license shall be denied if proof of liability insurance satisfactory to the commissioner is not provided. A licensee who fails to maintain a blanket motor vehicle liability insurance policy during the licensing period may be assessed a civil penalty of up to five thousand dollars ($5,000). The penalty may be assessed against the bond as provided for in Section 40-12-398. (d) A person who is subject to the licensing requirements of this article, but willfully fails to acquire the license, shall be subject to a penalty of five hundred dollars ($500) for the first violation and one thousand dollars ($1,000) for the second or subsequent violation. (Acts 1978, No. 539, p. 597, §3; Acts 1991, No. 91-321, p. 595, §1; Acts 1992, No. 92-186, p. 349, §29; Acts 1995, No. 95-727, p. 1553, §1; Act 2000-554, p. 1005, §2; Act 2014-158, p. 445, §2; Act 2019-244, §1.)

Ala. Code § 40-12-392.1 License — Adjustment of Application Fees; Biennial License.

40-12-392.1. License — Adjustment of Application Fees; Biennial License. (a) Beginning October 1, 2020, the application fee prescribed in Section 40-12-392 shall be equal to the average of the annual dealer license fees, as of January 1, 2020, of the contiguous states to Alabama and shall be rounded to the nearest twenty-five dollars ($25). The Department of Revenue may adjust these fees once every five years thereafter using the same calculation; provided, the adjusted fee may not exceed the application fee provided under Section 40-12-413. (b) On or after October 1, 2022, the Department of Revenue, by rule, may establish a biennial license in lieu of the annual license provided under Section 40-12-391. The application fee for the biennial license may not exceed double the amount charged for the application fee or for the annual license. (Act 2019-244, §2.)

Ala. Code § 40-12-393 License - Disposition of Fees Collected.

40-12-393. License - Disposition of Fees Collected. The commissioner shall deposit the application fees collected under this article into the State Treasury, which shall be appropriated as follows: (1) A minimum of twenty-five dollars ($25) or 10 percent, whichever is greater, of the application fee shall be appropriated to the General Fund of the state. (2) The remaining amount shall be continuously appropriated to the department for the inspection, issuance, and enforcement of the licensing requirements under this article. (Acts 1978, No. 539, p. 597, §11; Act 2019-244, §1.)

Ala. Code § 40-12-395 License - Supplemental Licenses; Off-Site Sales.

40-12-395. License - Supplemental Licenses; Off-Site Sales. (a) A person licensed under this article shall obtain a supplemental license for each additional place of business, in a manner as prescribed by the commissioner and upon payment of an additional application fee of five dollars ($5) for each additional location. The signage and other requirements of Section 40-12-392 shall apply to each additional place of business. Only one licensed dealer shall operate at the same place of business. (b) Notwithstanding the requirement that sales of new and used motor vehicles shall be made only from the permanent location of the new or used motor vehicle dealer, such dealers may conduct sales of new and used motor vehicles from locations off-site of their permanent locations on the following conditions: (1) The off-site sales events shall not exceed three per dealer per license year with each sale not to exceed 10 consecutive calendar days in duration. Off-site sales of new motor vehicles by new motor vehicle dealers shall be conducted only at a location within the new motor vehicle dealer’s area of responsibility as defined in the contract or franchise agreement between the new motor vehicle dealer and its manufacturer or distributor. Off-site sales of used motor vehicles shall be conducted only at a location in the county or city where the new or used motor vehicle dealer maintains a permanent location. (2) The off-site sale need not be conducted in a building or permanent structure, but the facilitator shall display a temporary sign at the location where the off-site sale is conducted identifying the name of the facilitator who is conducting the sale as stated on the license required by subdivision (3) and the name of the motor vehicle dealers who are participating in the sale as stated on the license required by subdivision (4). All advertisements and other notices of the sale must be conducted in the name of the facilitator. (3)a. At least 10 calendar days before conducting each off-site sale, the facilitator of the off-site sale shall obtain a master off-site sale license by making a license application to the commissioner and paying an application fee of twenty-five dollars ($25) for each off-site sale. On the application, the facilitator shall list each participating motor vehicle dealer and the participating motor vehicle dealer’s off-site sale license number, as required in subdivision (4). The off-site sale license required in subdivision (4) is not required if the facilitator and motor vehicle dealer are the same entity. Each motor vehicle dealer participating in the off-site sale shall obtain an off-site license required by subdivision (4) and provide the license to the facilitator prior to the facilitator making the application. b. The failure of a facilitator to disclose participating motor vehicle dealers shall subject the facilitator to the following penalties: 1. A facilitator that is a bonded agent of the state and in violation of this section shall be subject to a statutory notice of non-compliance. Subsequent violations may result in the suspension or revocation of designated agent status pursuant to Section 32-8-3 and rules adopted under that section. 2. A facilitator that is not a bonded agent of the state that is in violation of this section shall be subject to the penalty provisions as provided in subsection (d) of Section 40-12-392. (4) At least 10 calendar days before conducting each off-site sale, the motor vehicle dealer shall obtain an off-site sale license by making license application to the commissioner and paying an application fee of twenty-five dollars ($25) for each off-site sale to be conducted. If more than one motor vehicle dealer participates in the same off-site sale, each motor vehicle dealer participating in the sale shall obtain an off-site sale license from the commissioner. (5) This subsection shall not be construed to prohibit a new or used motor vehicle dealer from delivering a motor vehicle off-site or from selling a motor vehicle to a customer at the customer’s home or place of business. (c) In addition to the foregoing, the motor vehicle dealer shall obtain from the judge of probate or other county licensing official a county license for the off-site location by paying the county license tax imposed pursuant to Sections 40-12-51, 40-12-62, and 40-12-169, and shall provide to the commissioner proof of payment of the license upon application for each off-site sale. If more than one motor vehicle dealer participates in the same off-site sale, each motor vehicle dealer participating in the sale shall obtain from the judge of probate or other county licensing official a county license for the off-site location by paying the county license tax imposed pursuant to Sections 40-12-51, 40-12-62, and 40-12-169. (d) For purposes of this section, a new motor vehicle dealer temporarily displaying new vehicles at a shopping mall, auto show, or other location solely for advertising or display purposes and from which location sales are not conducted, shall not be deemed to be conducting an off-site sale and no off-site sales license shall be required. (e) For purposes of this section, an off-site sales license shall not be required for wholesale sales between licensed motor vehicle dealers or for retail sales by new or used motor vehicle dealers conducted at the permanent location of an auction company which is licensed as a used motor vehicle dealer or motor vehicle wholesale auction. (Acts 1978, No. 539, p. 597, §5; Act 2004-534, p. 1126, §1; Act 2014-158, p. 445, §2; Act 2019-244, §1; Act 2022-344, §1.)

Ala. Code § 40-12-396 License - Suspension or Revocation; Reasons for Revocation or Denial of License.

40-12-396. License - Suspension or Revocation; Reasons for Revocation or Denial of License. (a) The commissioner may, subject to the appeal provisions allowed in Chapter 2A of this Title 40, suspend or revoke any license issued for the willful and intentional failure of the licensee to comply with the provisions of this article or for the willful failure to maintain the business premises, location, and sign as described in the application. (b) A license may be revoked or a license application may be denied by the Department of Revenue for any of the following reasons: (1) Fraud practiced or any material misstatement in license application. (2) Change of condition after a license is granted or the failure to maintain qualification for the license. (3) Skipping title assignment; accepting open assignment of title and/or bill of sale for a motor vehicle which is not completed by identifying the licensee as the purchaser or assignee of the motor vehicle. (4) Having no established place of business. (5) Failing to keep and maintain records. (6) Knowingly dealing in stolen motor vehicles, parts, or accessories. (7) Willful failure to comply with provisions of this chapter, or any rule or regulation promulgated thereunder. (8) Disconnecting, turning back, or resetting the odometer of any motor vehicle in violation of state or federal law. (9) Filing a materially erroneous or fraudulent tax return as certified by the Department of Revenue. (10) Revocation as a designated agent, as provided for in Section 32-8-34, for failing to faithfully perform his or her duties as a designated agent. (Acts 1978, No. 539, p. 597, §8; Acts 1991, No. 91-321, p. 595, §1; Acts 1992, No. 92-186, p. 349, §30; Act 2014-158, p. 445, §2.)

Ala. Code § 40-12-398 Bond Prerequisite to Issuance of License.

40-12-398. Bond Prerequisite to Issuance of License. Before any master dealer license may be issued to a new motor vehicle dealer, used motor vehicle dealer, motor vehicle rebuilder, or motor vehicle wholesaler, the applicant shall deliver to the commissioner a good and sufficient surety bond, executed by the applicant as principal and by a corporate surety company qualified to do business in the state as surety, in the sum of not less than fifty thousand dollars ($50,000) or an amount as prescribed by the department. Such bond shall be in a form to be approved by the commissioner, and shall be conditioned that the motor vehicle dealer, motor vehicle rebuilder, or motor vehicle wholesaler shall comply with the conditions of any contract made by such dealer in connection with the sale or exchange of any motor vehicle and shall not violate any of the provisions of law relating to the conduct of the business for which he or she is licensed. Such bond shall be payable to the commissioner and to his or her successors in office, and shall be in favor of any person who shall recover any judgment for any loss as a result of any violation of the conditions hereinabove contained. The bond shall serve in lieu of the bond provided for in subsection (b) of Section 32-8-34 and, in addition to all other conditions, shall also be conditioned upon their performance of their duties as a designated agent under Chapter 8 of Title 32. The penalty provisions provided under this article, in addition to the tax liability incurred under Chapter 23 on the sale of a motor vehicle, may be assessed against the bond. (Acts 1978, No. 539, p. 597, §10; Acts 1991, No. 91-321, p. 595, §1; Act 2014-158, p. 445, §2; Act 2019-244, §1.)

Ala. Code § 40-12-399 Records to Be Kept by Licensees.

40-12-399. Records to Be Kept by Licensees. Every licensee under this article shall keep books and records in such form as may be approved by the commissioner, in which he shall record the purchase, sale or exchange, or receipt for the purpose of sale of every motor vehicle purchased or sold or held for sale by him, which shall include a description of each vehicle, together with the name and address of the seller, purchaser or owner of vehicles held by him for sale. Such description shall include the identification number of each such vehicle and shall also include a statement that the identification number has been obliterated, defaced or changed if such is the fact. (Acts 1978, No. 539, p. 597, §6.)

Ala. Code § 40-12-400 Violations of Article.

40-12-400. Violations of Article. Any person violating any of the provisions of this article shall be guilty of a Class A misdemeanor. (Acts 1978, No. 539, p. 597, §7; Act 2004-534, §1; Act 2014-158, p. 445, §2.)

Ala. Code § 40-12-401 Licensing of Off-Road Vehicle Dealers.

40-12-401. Licensing of Off-Road Vehicle Dealers. (a) Beginning October 1, 2025, every off-road vehicle dealer, as defined in Section 32-8-2, shall be subject to the licensing provisions of this article. (b) The department may adopt rules to implement and administer this section. EndFragment (Act 2024-190, §2.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026