How to Get a Car Auction License in Texas

The Lone Star State has specific laws that regulate its popular Texas car auctions. Maintaining compliance during the application process will ensure you can obtain a car auction license without making costly errors. A completed application must be submitted by the Texas car dealer to obtain an independent dealer license.

What Type of License Do You Need to Buy & Sell Cars at Auctions?

The Texas Department of Licensing and Regulation issues licenses for auctioneers to perform on the lot of any licensed dealer. This includes passenger cars, travel trailers, utility trailers, ATVs, and trailer/semi trailers.

• Wholesale dealer licenses reduce the overhead costs of operating a car dealership with a physical lot. This license also reduces employee expenses, overhead, and associated costs.
• Transactions with sales tax include direct, indirect, and consignment sales; they all require a GDN for the Texas auto dealer license.
• In addition to the GDN, a franchised Texas auto dealer license must be obtained for those who wish to sell new vehicles.

Requirements for Obtaining a Car Auction License in Texas

Texas law requires that training must be approved by the Texas Department of Motor Vehicles, or DMV. It must be made available to the public online. Six hours of online training must be given for new applicants, but only three hours are needed for renewal applicants.

• Eligibility criteria: The training covers various laws and rules and consequences for violations.
• Register a business: Register your business entity with the Secretary of State's office. This requires you to select an organizational structure.
• Documents: Collect and submit all supporting documentation required by the application form. This will be submitted along with the application after paying any fees and mailing costs.

Requirement 1: Select a Qualified Training Provider

The educational requirements for pre-license applicants are detailed in the Texas Transportation Code §503.029. As of March 1, 2020, only certain course providers are qualified to offer training for auto auctions. This includes institutions of higher education and motor vehicle trade associations located in the state. Trade associations must charge the same price for courses covering licensing requirements. The fees cannot be higher than $150 per individual trainee. A certificate of completion must be provided.

Requirement 2: Register, Obtain a Business Address

When you register your business with the Secretary of State, you need to provide an official address. The permanent business address must meet the minimum requirements of the DMV to be submitted with the license application.

Requirement 3: Fill Out Application, Submit Forms and Documentation

Go to the website for the Texas DMV, or TXDMV. If you print out the form, complete it in the ink required by law. Read the instructions carefully.

Here is a list of the most common documents you will need to provide:

• Proof of the general distinguishing number, which is issued by the Texas DMV
• Proof of a franchised dealer license from the DMV for businesses that sell new vehicles
• Proof of a Texas auto dealer bond with a two-year term.
• Copies of the car dealer license, EIN, and fictitious name
• Background check, fingerprints, and photo identification
• A copy of the certification from the educational training course

Step-by-Step Guide to Get a Texas Car Auction License

Step 1: Select the Right License Application

You can select and submit more than one application if you plan to operate under multiple licenses at the same time. Only certain licenses require a surety bond to fulfill the application requirements.

Step 2: Register Your Business, Secretary of State

Decide whether to operate as a partnership, a limited liability corporation, a sole proprietorship, a corporation, or a workers' cooperative enterprise. You must register the business with the Secretary of State. Registration can be done on the website.

To meet the permanent business requirement of the DMV, you must obtain a business address that meets the following specifications:

• The building must have connecting exterior walls on every side.
• The building must be located within a commercial zone.
• You must provide a valid business mailing address and phone number.
• The building must comply with zoning laws, deed restrictions, and regulations.
• The business office must contain at least one desk, two chairs, a phone, and internet access.
• You must have a permanent business sign featuring the business name in legible letters. It must be at least 6 inches high.
• Display areas must be well-lit and accommodate at least five vehicles.
• Business hours must be displayed at the building's main entrance.
• A lease agreement or proof of ownership must be obtained in writing.
• Phone lines must be answered by a service or employee from the hours of 8:00 a.m. to 5:00 p.m. during weekdays.
• Wholesale dealers are exempt from the business location requirement.

Step 3: Obtain a Texas Auto Dealer Bond

A Texas auto dealer bond is required for operating in the state. The surety bond provides the public with the necessary assurance to conduct transitions with confidence. Only a small percentage of the surety bond cost amount must be paid up front.