What is a bonded title?

A bonded title, also known as a surety bond title, is a type of vehicle title issued when the ownership history of a vehicle is unclear or questionable. It's essentially a way to legally transfer ownership of a vehicle even when there are issues preventing a standard title transfer. Here's a breakdown of key aspects:

Why are bonded titles needed?

• Lost or stolen titles: If the original title is lost, stolen, or destroyed, a bonded title allows for a legal transfer of ownership.
• Unpaid liens: If there are outstanding liens (loans) on the vehicle, a bonded title might be required. The bond acts as a guarantee that these liens will be satisfied.
• Issues with prior ownership: If there are discrepancies or uncertainties in the vehicle's history, such as missing paperwork or questionable previous owners, a bonded title can resolve this.
• Salvaged vehicles: Cars declared salvaged often require bonded titles due to the uncertain history and potential damage.

How does a bonded title work?

A surety company (a type of insurance company) issues a bond that protects the buyer and the state DMV. The bond typically covers the value of the vehicle. This means if there's a later claim on the vehicle (e.g., a hidden lien surfaces), the surety company will cover the cost. This protects the new owner from potential legal issues. To obtain a bonded title, the applicant typically needs to:

• Provide proof of ownership: This may include things like a bill of sale or other documentation demonstrating possession.
• Submit an application to the DMV: This application specifies the vehicle's details and explains why a bonded title is necessary.
• Pay a fee: There's typically a fee associated with obtaining a surety bond and registering the bonded title.
• Obtain a surety bond: The applicant must secure the bond from a surety company. The cost of the bond is usually based on the vehicle's value.

Implications of a bonded title:

• Lower resale value: Vehicles with bonded titles often sell for less than those with clean titles, as they indicate some past uncertainty or issues.
• More difficult to sell: Finding a buyer might be more challenging due to the perceived risk.
• Limited transferability: Some states may have restrictions on transferring bonded titles to other states.

In short, a bonded title is a legal mechanism to address title issues, providing a way to transfer ownership even when there are complications. However, it's crucial to understand the implications and potential risks before purchasing a vehicle with a bonded title. Always thoroughly investigate the vehicle's history and fully understand the terms of the bond.