What is a bonded title?

Titles are supposed to travel with the car from owner to owner, but they’re just pieces of paper which will inevitably get lost now and then.

If you bought a used car and didn’t get the last owner’s title, you’re going to have headaches down the road when you try to register it with the DMV or sell it.

Even if you have your car sale agreement and an armful of other paperwork, you can’t prove you’re the rightful owner of your car without a title.

The catch is, you can’t get a title without proving you’re the rightful owner!

Luckily, this is a problem bonded titles exist to solve! What is a bonded title? Let’s find out.

What is a title?

A title is easy enough to understand. It’s the legal document that corresponds to a vehicle and attests to who owns that vehicle.

The title will cover:

  • The car’s make
  • The car’s model
  • The year the car was made
  • The vehicle identification number (VIN)
  • Name and address of the current owner
  • Names of all previous owners.

When someone sells you a car, they really should be selling you the title as part of the purchase agreement.

However, sometimes titles get lost or buyers aren’t in a position to be fussy.

If you trust the seller is the real owner, you have no reason to worry about buying the car and getting a bonded title.

What is a bonded title?

A bonded title (sometimes called a Certificate of Title Surety or a bond title) exists to attest to the ownership of a vehicle when there’s no regular title available. 

As well as pointing to you as the legal owner, it acts as a kind of insurance that protects you from any liabilities that might result from not having the title.

For example, if it turns out you bought a stolen car and it gets tracked down to you, do you have to give it back?

Do you owe them compensation? This is the kind of situation a bonded title protects you in.

How does a bonded title work?

When you get a bonded title, it means you’ve got a surety bond that backs up your claim of being the car’s rightful owner.

That bond is issued by a bonding company, and will typically be one-and-a-half to two times what they deem the car to be worth.

If someone were to come forward and rightly claim the car was stolen from them and sold to you, then the bond will be used to compensate the owner for their stolen car. 

They recover their financial loss, and since you’ve done nothing wrong, you don’t get into trouble. (You will, however, have to pay the full value of the bond to your provider.)

Bonded titles are a great way for buyers to protect themselves, but keep in mind that they’re only a temporary fix. In most states you’ll need to hold the title for a specific period, maybe years, before you’re allowed to apply for a regular title.

How to get a bonded title

Bonded titles are usually issued by your state’s DMV.

The laws around bonded titles vary state by state, but in most cases you’ll have to demonstrate an attempt to track down the title or its owner, which might include writing to local authorities about the vehicle.

Have as much documentation ready as you can find. If you’re buying a car without a title, make sure you’re getting paperwork like a valid car receipt or a notarized statement from the seller.

Once you have everything you need, shop around for a surety bond company or an insurance provider who offers surety bonds. 

You’ll need to give them all the information that would go on a title, then they’ll use that to give you a quote for the bond.

They’ll set that price partly based on the value of your car, but also on other factors like your credit history. 

If you’re happy with the price, accept the bond and you’re ready to get your bonded title.

Where to get a bonded title

Once you’ve purchased the bond, you’ll be given a bond certificate.

Take that and all the other documentation you need to the DMV, and, if approved, they’ll give you a bonded title to your car. 

Once you have your bonded title, you can use that to register your car with them so you can legally drive it.

How long does it take to get a bonded title?

Depending on your state and what documentation you have, getting a bonded title might take a few weeks.

This is why if you’re buying a car without a title, or you’ve been gifted or inherited one, you need to do some research on this process ahead of time.

Once you’ve submitted everything, the state needs to get around to reviewing your application, checking your documents, and checking that there are no outstanding liens or claims against that vehicle. 

They’ll also check that your vehicle doesn’t match any reported thefts they have records on.

Make vital documents for your vehicles with PandaDoc

As we’ve seen, car ownership comes with reams of paperwork.

Whether you’re buying, registering, insuring, or selling, you’re going to have to deal with complex forms and legal requirements every step of the way. 

Like bonded titles, all of this might exist for good reason, but does it have to be so confusing and time-consuming?

Luckily, PandaDoc is here to help.

We have vehicle document templates for every occasion: Purchase agreements, leasing agreements, bills of sale, and more.

All of these save you time while giving you the paper trail you need to protect yourself and your vehicle.

And with our end-to-end document management tool, you can send your documents online and sign them on any device.

Why not learn more about how PandaDoc can help you, by scheduling a 15-minute demo?