I. (a) Every retail vehicle dealer as defined in N.H. Rev. Stat. § 259:89-a, every auto wholesale dealer as defined in N.H. Rev. Stat. § 259:5-a, every automotive recycling dealer as specified by N.H. Rev. Stat. § 261:123, and certain utility dealers as defined by N.H. Rev. Stat. § 259:121 if required by rule of the commissioner, shall obtain a bond or equivalent proof of financial responsibility as described in paragraph VI, and continue in effect a surety bond or other equivalent proof of financial responsibility satisfactory to the department in the amount of $25,000 executed by a surety company authorized to transact business in the state by the insurance department.
(b) The bond or its equivalent shall only be for the benefit of:
(1) A natural person who purchases a vehicle from a dealer, an automotive recycling dealer, or a utility dealer, and who suffers loss on account of:
(A) The dealer’s default or nonpayment of all valid bank drafts, including checks, drawn by the dealer for the purchase of motor vehicles;
(B) The dealer’s failure to deliver in conjunction with the sale of a motor vehicle a valid motor vehicle title certificate free and clear of any prior owner‘s interests and all liens except a lien created by or expressly assumed in writing by the buyer of the vehicle;
(C) The motor vehicle purchased from the dealer was stolen; or
(D) The dealer’s intentional or knowing failure to disclose the vehicle’s actual mileage at the time of sale.
(2) A New Hampshire town or city or the state of New Hampshire which suffers loss on account of:
(A) The dealer’s failure to collect all official fees related to motor vehicle registration, permits for registration, registration transfer, and title applications required and permitted under this chapter; or
(B) The dealer’s nonpayment of all official fees collected to register a motor vehicle, issue a permit for registration, transfer a registration, or title a vehicle.
(c) Subparagraph (b)(2) shall apply to only those dealers who are dealer agents appointed pursuant to N.H. Rev. Stat. § 261:74-h. Subparagraph (b)(2), if applicable, shall not require the dealer to obtain a separate bond.
II. Recovery against the bond or its equivalent may be made by any such person, who obtains a final judgment in a court of competent jurisdiction against the dealer for an act or omission on which the bond is conditioned if the act or omission occurred during the term of the bond. Every bond shall also provide that no suit may be maintained to enforce any liability on the bond unless brought within one year after the event giving rise to the cause of action.
III. The bond or its equivalent shall cover only those acts and omissions described in paragraph I. The surety on a bond shall not be liable for total claims in excess of the bond amount, regardless of the number of claims made against the bond or the number of years the bond remained in force.
IV. A separate bond shall be required for each different name under which the dealer conducts his business and for each community in which the dealer has a place of business.
V. Any dealer covered by an association bond as provided in N.H. Rev. Stat. § 261:101 shall only be covered under one name in one community. A dealer covered under N.H. Rev. Stat. § 261:101 who has a place of business in more than one town or city shall file a separate bond as provided in this section for each separate community in which he operates.
VI. In lieu of the bond required by this section, the department may allow the dealer to deposit collateral in the form of a certificate of deposit or irrevocable letter of credit, as authorized by the banking laws of the state of New Hampshire, which has a face value equal to the amount of the bond otherwise required. Such collateral may be deposited with or executed through any authorized state depository designated by the commissioner. Interest on any such certificate of deposit shall be payable to the dealer who has deposited it as collateral, or to such person as the dealer or the certificate may direct.
VII. Any surety is required to provide 60 days’ notice of cancellation of the bond or certificate of deposit or letter of credit to the department, and to the dealer.