What do you do when you own your vehicle, yet do not have the title? One solution is to get a bonded title. This type of title is issued by the Department of Motor Vehicles as a temporary document and enables you to register the vehicle and obtain auto insurance despite not having the original title. A bonded title is most commonly used to avoid or settle legal disputes when there is any question regarding whether or not you actually own the vehicle. It also demonstrates that there is a surety bond attached to the title, which means a business is financially ready to defend your ownership.
TL;DR (Too Long; Didn't Read)
A bonded title is proof that you own a certain vehicle, despite not having the official title, and that your title is backed by a surety bond. It is also called a “Certificate of Title Surety.”
When You May Need a Bonded Title
You may need a bonded title when you do not have the title to your vehicle, you cannot find it, you cannot get it from the seller and you cannot obtain a duplicate certificate of title from the DMV. This may occur when you buy a vehicle and do not receive the title from the seller. If you bought or were given a vehicle and only given a bill of sale as documentation, a bonded title may be the best next move.
You may have bought a vehicle only to find the title was improperly assigned, meaning the seller or your name was wrong, or it was unreadable. You might also find that the seller’s name was not on the title at all, which is known as title jumping. In either case, you need to obtain a bonded title to prove your ownership.
Another reason you may need a bonded title is because you lost the title to your vehicle.
However, before you immediately jump to buying a bonded title, call the DMV. You may not need one at all. Also, your state may not issue bonded titles; over a dozen states don’t.
You Must Lawfully Own the Vehicle to Obtain a Bonded Title
You must have proof of ownership of the vehicle, which may include a bill of sale or notarized affidavit, to obtain a bonded title. You must have lawfully obtained the vehicle from a sale or gift.
You cannot claim ownership of an abandoned or stolen vehicle. Claiming ownership of an abandoned vehicle is an entirely different process, which includes trying to find and contact the vehicle’s owners and local authorities. If the owners fail to claim the vehicle, the authorities may conduct a lien sale. In this case, you can bid on the vehicle, and if you are successful, you will obtain the title.
Obtaining a Bonded Title
The actual process for obtaining a bonded title varies by state. You should speak with your local DMV about filling out the appropriate forms, which may differ depending on the value of the vehicle. These forms are unique to each state, so you cannot obtain forms online from the Texas DMV if you need forms for Arizona, for example.
You must obtain a surety bond. This is similar to an insurance policy, which you purchase from another company. The company providing the surety bond guarantees to provide you financial backing if you need to legally prove your ownership of the vehicle. The DMV may have information about where to obtain a local surety bond, but you also may need to research this on your own.
Once you have all of the proper paperwork filled out and have purchased an appropriate surety bond, then you can go to the DMV and apply for the bonded title.
The Cost of a Bonded Title
The cost of obtaining a bonded title varies depending on the bond you need and your state’s fees. You may need to pay the company providing the bond a percentage of the bond amount. You can anticipate paying more than $100. If your vehicle is worth a great deal, expect to need a more thorough bond policy and to pay a few hundred dollars.
The DMV fee varies based on the state.
Selling a Vehicle With a Bonded Title
Yes, you can sell a vehicle with a bonded title. However, it may be harder than if you had a clear, official title. Buyers looking for used cars may not be interested in the risk a bonded title brings.
Bonded titles typically remain in effect for three to five years. If you sell the vehicle during that time, the buyer must carry on with the bonded title for the remainder of that period. At the end of the time period, the current vehicle owner must go to the DMV and apply for a clean title.