What is bonded title?

A bonded title, also known as a defective title bond or a lost title bond, is a type of surety bond used when the ownership of a vehicle is unclear or the original title is missing. It serves as a guarantee to the state's Department of Motor Vehicles (DMV) that the person applying for the title is the rightful owner of the vehicle, even without the standard documentation.

Here's a breakdown:

• Purpose: The bond protects the DMV and any subsequent purchasers of the vehicle from financial loss if the original title holder makes a claim against the vehicle.

• How it Works: The applicant (the person seeking the title) purchases a surety bond for a certain amount, typically 1.5 or 2 times the vehicle's value, depending on state regulations. They then submit the bond along with other required documentation to the DMV.

• Claim Process: If someone believes they are the rightful owner of the vehicle and can prove it, they can make a claim against the bond. The surety company investigates the claim, and if valid, pays the claimant up to the bond amount. The applicant is then responsible for reimbursing the surety company.

• Title Clearance: After a specific period (usually 3-5 years), if no claims have been made against the bond, the bonded title becomes a clear title, indicating undisputed ownership.

• Requirements: Requirements vary by state, but generally include:

  • Application for a bonded title
  • Vehicle inspection
  • Proof of residency
  • Bill of Sale or other documentation showing how you acquired the vehicle
  • Surety Bond