Is a bonded title a clean title? No, a bonded title is not a clean title. The title of a car contains important legal information about its ownership. When you buy a car and transfer it to your name, you usually get a title. However, if things do not go as expected, you end up without a title. If you have no title certificate, that’s when you need a bonded title or certificate of title surety bond. It is not hard to get.
Is a Bonded Title a Clean Title?
A bonded title is not the same as a clean title. You only get a bonded title when you have purchased or received a vehicle, but cannot provide the proper paperwork to obtain a clean title. With a bonded title, you can register the vehicle, obtain license plates, and drive legally.
However, a bonded title comes with risks; it’s not a guarantee of ownership nonetheless. If another person can prove they are the rightful owner of the vehicle, the person with the bonded title may lose the vehicle and the money they paid for it.
A clean title, on the other hand, is free of any liens or claims. This type of title certificate shows that the title holder is the rightful owner of the car.
What is the Cost of a Bonded Title?
If your bond is for $6,000 or less, it usually costs $100. But if the bond is for more than $6,000, the price goes up, and it depends on the cost of the bond and your state. If your bond is more than $20,000, they might need to review your application more carefully before approving it. But you can also find bonds that do not require an additional review.
How Does a Bonded Title Work?
A bonded title is a promise backed by money. It’s a unique title for a car that has a guarantee to prove the owner’s legal rights. When someone gets a bonded title, they promise that all the information about the car is legitimate, and they have to take responsibility for it.
Now, a surety bond is a deal involving three people, including the surety, who promises to pay if the second person, known as the principal, does not for the third person called the obligee. So, a surety bond is a safety net for any financial problems if the principal cannot deliver on their promises.
If the DMV or someone else thinks the car owner is lying about the vehicle ownership, they can request money from the title bond. The person who made the promise (the owner) has to repay the money if the bond has to cover any costs.
Why Would You Need a Bonded Title?
You might need a bonded title in any of these situations:
- You bought a car, but the seller did not give you a title.
- The seller gave you a title, but it did not have the current owner’s name on it.
- You received an antique or custom car from a seller without a title.
- The seller gave you a title, but you lost it before putting it in your name.
After 3-5 years (depending on your state), your bonded title turns into a clean title, unless it has a salvage or rebuilt history. You can still sell the car, but you need to disclose the surety bond to the buyer. Until it becomes a clear title, you are responsible for the bond.
What Does Getting a Title Bonded Mean?
A title bond is a guarantee to the DMV that the vehicle is yours and will pay the value of the vehicle if someone with the proper title comes out to claim ownership.
Note that a bonded title does not guarantee 100% ownership since someone else can make an ownership claim on the car. A bonded title only serves as temporary paperwork that can be challenged within 3 to 5 years, depending on your state.
Before you can get a bonded title, you need to:
- Try to find the original title. This might mean reaching out to the previous owners and reaching out to state officials. Use certified mail so you have proof in case the state needs it.
- Ask your state’s DMV how to figure out the amount you need to pay for your title bond penalty. They usually calculate it based on your car’s value, which might involve getting your car checked or using a specific number like 2 times its worth.
- Collect papers such as a bill of sale for your state’s DMV. In some states, you might also have to pay taxes or fees.
Final Thoughts
A bonded title is not a clean title, therefore, it is open to potential claims by someone else who possesses the proper title. If you find yourself in a legal battle and need to determine car ownership with a bonded title, contact your local lawyer. If there’s a disagreement about the bonded title, your lawyer can provide legal advice to guide you through.
