If you have a vehicle that you need to register and insure, but you don’t have the existing title, you might be wondering, “Is a Bonded Title Right for Me?” It’s important to understand that entering into a bonded title requires you to sign some legal documents. That’s why you need to make sure it’s the right course of action for you.
I Have No Idea What We’re Talking About. What’s a Bonded Title?
A bonded title proves a person owns a vehicle that has a lost or missing title. The DMV will treat this as the vehicle’s legal title, allowing the owner to register the vehicle.
Imagine it’s time to register your car but you can’t find the title. If the title was already in your name, that’s an easy fix. But what if it wasn’t?
Maybe you inherited the car from a relative or came about it through other means, and the title was never in your name. You’re 100% certain that you own the car, you would even put money on that, but you can’t prove it to the DMV without a title. If only you could pay someone to believe you…
The Process of Getting a Bonded Title
Getting a bonded title involves paying a surety bond lender a nominal fee (usually about $100) to back your statement that you own the vehicle. In turn, the lender promises to pay an amount up to the full value of the vehicle in the event that someone else claims to own the vehicle and their claim is legally valid. This allows you to apply for a new title through the DMV like you would normally.
It’s imperative that you be 100% sure you’re the legal owner of the vehicle. If someone files a successful claim against your bonded title, you would owe the surety lender the complete insured amount.
Is a Bonded Title the Right Move?
It truly depends on your situation. To qualify for a bonded title, the vehicle can’t be stolen, scrapped or currently the subject of litigation. A bonded title is issued by your state’s DMV and you must swear, under penalty of law, that it is yours.
Most people find out about the bonded title option because the DMV tells them they need one. It’s an agreement you don’t want to lie about.
Bonded Titles vs. Surety Bonds
A surety bond is what a third-party company issues you which covers the company in the event of a claim. Basically, if another person proves that the car is actually theirs, the bond covers the liability.
In short, the issuing company and you enter into a contract. The bonding company promises the DMV that payment will be made from them if another owner steps forward (using your money, of course).
What if a Former Owner Claims the Car?
During the process, the vehicle’s current registered owner is notified of the bonded title.
If it turns out that the car isn’t yours, the real owner files a claim on your surety bond or bonded title. Then, the DMV or the bonding company has to pay on that demand, as long as it is valid. At that point, you are legally responsible for the full amount of the bond.
The bond amount is based on the vehicle’s value. The bond is paid when you apply for the title, be that at the DMV or the bonding company, so you won’t receive a call asking for more money if a previous owner does make a claim.
But let’s not get ahead of ourselves.
Requirements to Obtain a Bonded Title
Each state has different conditions, so you need to check with your local DMV. However, the bonded title is filed through their offices regardless of the state.
To get one, you typically need to have the following information:
Proof of Intent
This is proof that you attempted to acquire the original car title. This might include supporting documents which show you tried to contact the previous owners. Make sure you keep the copies of all certified mailings.
Talk to your local DMV about what forms they require you to fill out. Some states supply different paperwork depending on the value of the vehicle.
Proof of Purchase
You’ll also want to show that you either purchased the vehicle yourself or received it as a gift. Some states require that you also pay the taxes on it at this point, prior to them giving you a bonded title.
A Valid Surety Bond
You will need to obtain your surety bond from a licensed agency prior to applying for a bonded title.
A Word of Caution
Getting a bonded title doesn’t guarantee you ownership. There’s always a chance that the previous owner or another party might claim the vehicle is theirs.
Technically, a bonded title is considered to be a provisional document. Some states allow the bonded title to be challenged up to three years after the issue date.
Reasons to Consider a Bonded Title
There are several scenarios in which you might consider getting a bonded title.
Situation #1: You bought a vehicle but didn’t get the title
Sue purchases a car from Joe, but he never gives her the title. In this situation, it might be wise to go for a bonded title. However, this does have its risks, so it would be better if she continued fighting for the original instead.
If Sue did decide to move forward, she would want to ensure that the vehicle is legally hers. Otherwise, she could pay out a lot of money in the future. Valid proof of purchase includes the canceled check that Joe cashed or the Bill of Sale. Otherwise, she could attempt to turn in a notarized statement explaining how she came into possession of the vehicle, but this isn’t always a wise approach.
Situation #2: You only received a Bill of Sale
When Donna received her car as a gift, she only got the bill of sale. Now, Jerry can’t get the title from the previous owner to give it to Donna. She doesn’t have a canceled check since she didn’t pay for the car; Jerry did.
Donna is in a predicament because she can’t prove ownership in her name. Everything was technically done through Jerry. If she doesn’t have all her ducks in a row in this situation, this could be a costly gift.
She can keep the Bill of Sale in this situation and get a notarized statement from Jerry expressing he gave Donna the gift and was unable to get the title.
Situation #3: You buy a vehicle and receive a title that’s not properly assigned
Jack buys a car but later found out that the title wasn’t appropriately assigned. Either it had the wrong name on it or it was in the wrong spot. It could also be that the seller’s name wasn’t on the title at all. This might be an indication of title jumping and should’ve caused Jack to run the other way.
Either way, you might want a bonded title if you can’t get the seller to correct the error first. Sometimes, sellers don’t want to help you out much after they get your money (more about that in a minute).
Situation #4: You purchased a vehicle and later lost the title
Sally loves the car she just bought and she is ready to transfer the title into her own name. Uh oh – she lost the title before she was able to take the next step. Now what?
If she can’t convince the original owner to get a replacement and give it to her, she’ll have to take her Bill of Sale and receipt to get a bonded title. Of course, had she transferred the title right away and then lost it, she could have just applied for a duplicate certificate, but hey, things happen.
My Personal Story
Unfortunately, I’ve had the not so fun pleasure of dealing with a bonded title myself. A few years ago, I found a van for my family in Arkansas (a state away from me). It was exactly what we were looking for and the price was unbelievable.
I ran a vehicle history report before going but didn’t really know what I was looking at. On the report, I saw that the owner applied for two titles. Again, I didn’t think much about it.
I went to meet the guy, who seemed entirely legitimate. The van was exactly what I expected and we completed the sale.
Everything Sounds Good – What Happened?
When I brought the title back to Texas to change it over, imagine my surprise when they told me that the original title I handed them was no longer valid. It turned out the previous owner thought he lost the title and applied for a new one.
While waiting for his replacement, he found the original which he gave to me. Instead, the original should have been destroyed and was no longer valid.
Here I was with my family’s perfect van in someone else’s name. Plus, the guy was a state away. So I started calling him.
He never did return my calls. I don’t know if he was trying to pull something or he just didn’t want to be bothered, but I had no option other than to get a bonded title.
So, my perfect van cost me a good deal of money to prove that I was the owner. Was it worth it in the long run? Maybe. Would I do it again willingly? No way!
Your Best Bet
I would rather see you make sure you receive the title with your purchase than ever have to deal with getting a title bond.
However, if fate takes you down that road, at least you know Title Gods is there to help. Had I known there were people as skilled and trained as this company, I would have never attempted to do it myself. Lesson learned – the hard way. Don’t walk this path alone.
Title Gods specializes in recovering lost car titles and solving all kinds of title-related issues. We are not attorneys. This article is not legal advice.