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.
You’ll want to consult an attorney for legal advice, but today I can give you a brief rundown of what a bonded title involves and shed some light on your options.
I Have No Idea What We’re Talking About. What is a Bonded Title?
Imagine it’s time to register your car but you can’t find the title. If the title was already in your name, that would be 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…
A bonded title proves that a person owns a vehicle which has a lost or missing title. The DMV will treat the bonded title as the vehicle’s legal title, allowing the owner to register the vehicle.
An unsigned car title. Source
The Process of Getting a Bonded Title
Getting a bonded car title involves the following:
You pay a small amount of money to a bond company and receive a bonded title
The car’s last legal owner is notified and given a window of time to claim the vehicle (if that’s you, nobody will)
If nobody else claims the car during that time, it is legally yours
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.
What’s the Catch?
It is 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 will owe the surety lender the complete insured amount – which could easily be thousands of dollars.
In plain English, this means you can’t go pull a car out of someone’s field without their permission and hope that a bonded title will work in your favor. It won’t – the last known owner of the vehicle is notified (often several times) about the bonded title in progress.
Can You Get a Refund?
A bonded title involves a commitment. The fee you paid usually covers administration and processing if all goes as planned and you get your title. In the world of bonded car titles, refunds are rare and situational. You will have to talk to the bond company about that.
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, so start by running a VIN check to make sure you are the legal owner of the vehicle before you pursue a bonded title.
Bonded Titles vs. Surety Bonds: What’s the Difference?
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 company’s liability.
With a bonded car title, you and the issuing bond company enter into a contract. The bond company promises the DMV that payment will be made from them if another owner steps forward (using your money, of course). If nobody does, which is what will happen if you are the car’s legal owner, the car becomes yours outright.
What if a Former Owner Claims the Car?
During the process, the vehicle’s last known owner is notified of the bonded title.
If someone has reason to believe the car is theirs, they will file a claim on your surety bond or bonded title. If that claim is found to be valid, the DMV or the bonding company has to pay on that claim. At that point, you are legally responsible for the full amount of the bond which is often much higher than your bonding fees.
The bond amount is based on the vehicle’s value. The bond is often paid when you apply for the title, be that at the DMV or the bonding company, so you may not receive a call asking for more money if a previous owner does make a claim. It’s best to check in periodically.
But let’s not get ahead of ourselves.
A Word of Caution
Receiving a bonded title doesn’t guarantee 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 several years after the issue date, so if there is any chance you don’t own the vehicle outright, you need to know how long that window is in your state. The bond company can confirm the window in your state.
We suggest that before you start the process you should run a VIN Check to confirm that you are the last known owner of the vehicle in question.
What You Need to Apply for 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 prove that you attempted to contact the previous owners. Make sure you keep the copies of all certified mailings.
Relevant Forms
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 how you came to own the vehicle, whether you purchased the vehicle yourself or received it through some other means. Some states require that you pay taxes 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.
When Should I Consider a Bonded Title?
There are several scenarios in which you might consider getting a bonded title. Remember, we are not attorneys and this article is not legal advice. Consult an attorney if you need legal advice.
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 title instead.
If Sue did decide to move forward, she would want to ensure that she can prove 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 stating ownership. She could also turn in a notarized statement explaining how she came into possession of the vehicle, but this isn’t always a solid approach.
Situation #2: You received a car through unconventional means
When Donna received her car as a gift from her uncle, she only got the bill of sale. Her uncle can’t find the title to give it to her. She doesn’t have a canceled check since she didn’t pay for the car, her uncle 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, then approach a title bond company and get their opinion.
Situation #3: You buy a vehicle and receive a title that is 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 signed 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, but a bonded title could come to the rescue.
Sometimes, sellers don’t want to help you out much after they get your money (more about that in a minute). In that case, you might pursue a bonded title if you can’t get the seller to correct the error first.
Situation #4: You purchased a vehicle and 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 transfer it into her name. 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.
It wasn’t a Sportsmobile, but a man can dream. source
My Personal Experience with Bonded Car Titles
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 VIN check before going but didn’t really know what I was looking at. On the report, I saw that the owner applied for two titles previously. 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 Next?
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 title which he gave to me. In fact, the original was no longer valid and should have been destroyed.
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.
And calling….
And calling…
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 is to Plan Ahead
I would rather see you make sure you receive the title with your purchase than ever have to deal with getting a title bond like I did.
However, if fate takes you down that road, at least you know Dirt Legal is here to help. Had I known there were people as skilled and trained as the ones at this company, I would have never attempted to do it myself. Lesson learned – the hard way. Don’t walk this path alone.
Run a detailed VIN check on any car you intend to purchase or already own and are considering getting a bonded title for. This will help you gather the facts about the vehicle’s ownership history to help you on your path toward getting a bonded title. Dirt Legal can also get you a new title and license plates for just about anything with wheels. In some situations, this is better than getting a bonded title. Click the links to learn more.
If you aren’t sure if a bonded title is right for you, contact us and we will talk you through our options.
We are not attorneys. This article is not legal advice. Cover image source
The true story of how one of our staffers was blackmailed while buying a car without a title.