What is a Bonded Title and Why is it Needed? - Bonding Solutions

What is a Bonded Title and Why is it Needed?

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Buying a car may be a perplexing process filled with several questions. Before acquiring a car, it is critical to understand the status of the title. Because most individuals have no idea what “bonded” implies, a title labeled “bonded” can immediately raise suspicions. Hopefully, we’ll be able to answer some of your questions here.

The certificate of title for a car contains essential legal information regarding the vehicle, such as who owns it. When most people buy a car and have it transferred into their name, they get a certificate of title, but what happens if the process doesn’t go as planned?

When a vehicle’s title is missing, the state may compel the titleholder to get a bonded title, also known as a certificate of title surety bond. Obtaining a bonded title is not difficult if you understand the fundamentals of how a bonded title works. What are the differences between a bonded title and a surety bond, and who would require a bonded title? Find out below.

What is a Bonded Title?

A bonded title, also known as a Certificate of Title Surety Bond or Lost Title Bond, is a document that establishes who owns a car. A bonded title can be used instead of a traditional car title to register a vehicle with the Department of Motor Vehicles (DMV), get insurance for the vehicle, or sell the vehicle. 

Bonded titles are available in most states for a variety of vehicles, including automobiles, buses, motorhomes, and motorcycles.

Why does this vehicle have a bonded title?

When a car title is lost or damaged, there is no way to verify that the person in charge of the car was the lawful owner. Because they wouldn’t be able to transfer the title ordinarily, they’d have to go through the procedure of obtaining a bonded title, which would include purchasing a surety bond.

How much does a certificate of title bond cost?

For bonds covering $6,000 or less, title bonds cost $100. The premium will increase if the bond amount surpasses $6,000, and it will vary based on the precise bond amount and the state requirements for where the car is titled. 

If your bond amount exceeds $20,000, your application may be subject to an underwriter’s assessment before being granted. It is possible to purchase bonds that do not require underwriting.

How to Quickly Obtain Your Title Bond

In most cases, title bonds can be acquired in a matter of minutes online or over the phone. Once your payment has been completed, your certificate of title bond will be issued.

Please have the following information on hand when requesting your title to make the process go as smoothly as possible:

  • Name (as seen on your driver’s license) 
  • Address 
  • Year, manufacture, and model of the vehicle 
  • The number assigned to a vehicle (VIN) 
  • The worth of a car (determined by obligee requiring the bond)

Bonded Titles and Vehicle Titles 

A vehicle title is a government-issued document that contains important information about a particular vehicle. The legal owner’s name, the car’s make and model, the VIN (vehicle identifying number), and if the car has ever been destroyed or damaged by floodwaters are all listed on the title. The title is required by the car owner to:

  • The car must be registered with the state’s Department of Motor Vehicles. 
  • Purchase automobile insurance. 
  • Transfer ownership of the car to a new owner.

A proper certificate of title should is usually included with every car sold. Vehicle titles, on the other hand, are occasionally misplaced, destroyed, or stolen. In rare circumstances, a vendor may sell a car without the necessary title documents, either purposefully or unintentionally to which the car owner may be required to acquire a certificate of title bond.

Surety Bonds and Bonded Titles 

A bonded title is one that contains a surety bond to ensure the car owner’s legal ownership. A car owner assumes legal and financial responsibility for the accuracy of their assertions about the car when they purchase a bonded title.

What is the definition of a surety bond? A surety bond is a contract between 3 parties by which one party, the surety, guarantees the performance or obligations of a second party, the principal, to a third party, the obligee. A surety bond is a guarantee to be liable for any debt, default, or failure of the principal.

The DMV or another affected party can make a claim against the title bond if the principal misrepresents any aspect of their ownership of the vehicle. The principal is liable for reimbursing the surety for any claims paid by the surety for damages.

Is a Bonded Title Required? 

The titleholder may be required to get a bonded title for the following reasons: 

  • Purchased a vehicle from a vendor who did not provide a title
  • A vendor sold you a car that didn’t have the current owner’s name on the title
  • Purchased an antique or custom car from a vendor who did not provide you with a title
  • The car title was supplied by the vendor, but you misplaced it before you were able to use it

Your bonded title will become a regular title after a length of time set by state law, generally three to five years. You may still sell your automobile with a bonded title, but you’ll have to tell any potential purchasers about it. Until the title is clear, the individual who acquired the bonded title is liable for the surety bond. If you have any questions about bonds or want to get advice visit Bonding Solutions and speak to a Surety Bond Specialist.

What Is a Bonded Title and How Do I Get One? 

You must first complete the following procedures before purchasing a bonded title: 

  • Make every reasonable effort to locate the right original title, which may include contacting prior owners and state officials. Use certified mail to ensure that you have receipts for your communications in case the state asks for them.
  • Request instructions from your state’s DMV on how to determine the appropriate penalty total (bond amount) for your certificate of title bond. This will typically entail having your car evaluated and will be based on the approximate worth of your car (or the value multiplied by a set number, such as 2 X the value).
  • Gather supporting documents, such as a bill of sale if one was provided, and submit any needed papers to your state’s DMV. You may be required to pay certain taxes and/or fees in some states.

It should be emphasized that a bonded title does not ensure car ownership and can be challenged. A bonded title is usually regarded as a “provisional” document, and it can be contested for a period of time after the certificate has been granted. A bonded title can be contested in several states for up to three years after it was issued.

What Can a Bonded Title Be Used For? 

A bonded title can be used for a variety of things, such as: 

  • For legal purposes, determining who owns a vehicle (ex. used car scams) 
  • Keeping yourself from being held liable for deception while selling a car 
  • Allowing the owner of the vehicle to purchase insurance or register the vehicle with the DMV

Bonding Solutions makes applying for a bonded title simple: simply search for bonded titles in your state, and our vast network of sureties will provide you with a price in minutes.

If I Have Legal Issues with a Bonded Title, Do I Need a Lawyer? 

If you’re in the middle of a court battle, a bonded title might assist you to figure out who owns the car. Contact a goods and services attorney if you need assistance studying your state’s laws on bonded titles and other forms of car certifications. Your lawyer has the ability to help you.

If there is a disagreement about the bonded title, your attorney can help you with legal counsel.

Do you have any questions regarding obtaining a bonded title, the cost of a certificate of title surety bond, or anything else? Give us a call at (877) 841-6745 to speak with one of our surety bond specialists at Bonding Solutions.

published on Friday, June 18th, 2021


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