A bonded title dispute may arise from a transaction that involves the transfer of a vehicle or other type of automobile. A bonded title provides legal proof that an individual is the actual owner of a vehicle.
Because of this, a bonded title dispute may arise when the ownership of a vehicle is in dispute. Ownership disputes may occur in several situations, including:
- Used car scams, for example, selling cars with fraudulent titles;
- Misrepresentation when selling a vehicle, for example, selling title to a different car;
- Various insurance disputes;
- Cases involving some sort of breach of contract, such as failing to deliver title after a dispute.
As noted above, a bonded title is typically obtained by filing with a local DMV. Additionally, they cannot be obtained for a vehicle that was abandoned.
What Is a Bonded Title?
A bonded title is a certificate that provides proof of an individual’s ownership of a car, truck, or other types of motor vehicle.
A bonded title permits an owner to conduct various transactions legally, which include:
- Selling the motor vehicle;
- Transfer valid title to the car;
- Registering the car with a local Department of Motor Vehicles (DMV); and
- Obtaining insurance for the car.
A bonded title is also sometimes referred to as a Certificate of Title Surety. It is important to note that the exact title which is used may vary by jurisdiction.
Bonded titles are issued when the original title is missing or incorrectly assigned. When an individual applies for a bonded title, they are required to pay a vehicle surety bond, which ensures that they are the true owner of the vehicle.
In contrast to an automobile warranty, a bonded title generally does not make any claims or promises regarding the condition of a vehicle. The bonded title simply provides proof of ownership of the vehicle.
In California, a bonded title is only required if the owner of a vehicle does not have a title in their name and they have no way of obtaining one. A bonded title is not necessary if the owner of the vehicle loses their title or if their title is stolen, so long as the title is in the individual’s name.
In California, if an individual loses their title or is stolen, the individual will need to fill out Form REG227 in order to obtain a new one. The State of California requires a bonded title to protect the state against activities by the vehicle owner, which may result in a financial loss.
How Are Bonded Titles Obtained?
It is typically necessary for an individual to file for a bonded title with a Department of Motor Vehicles or an equivalent agency. The steps required to obtain a bonded title typically involve the following:
- Purchasing the vehicle or receiving it as a gift;
- Making a legitimate effort to obtain the original title prior to applying for a bonded title;
- In some regions, payment of certain taxes.
In most cases, there needs to be a transfer of ownership from a legitimate owner to the new owner in order for a bonded title to be issued. In other words, bonded titles are not typically issued for abandoned vehicles.
Bonded titles can usually be obtained by filing with a local DMV. Although the laws may vary from state to state, there are certain main requirements for obtaining a bonded title, which typically include:
- Making a diligent effort to acquire the original car title and any supporting documents by contacting the prior owners or relevant authorities using certified mail. Keep receipts of the certified mail sent;
- Obtain the relevant forms from the local DMV. In California, a Statement of Facts, or Form REG 256, is required if the vehicle the individual wants a bonded title for is valued at or less than $4,999. Form REG 5057 is required if the vehicle is valued at $5,000 or more;
- The vehicle must have either been purchased or received as a gift. An individual usually cannot file for a bonded title if the vehicle in question was abandoned; and
- Some states may require that the individual pay certain taxes before they are issued a bonded title.
For the State of California, specifically, there are four main steps for obtaining a bonded title, including:
- Filling out the title application and corresponding forms, which can be completed on the DMV website. This includes information regarding:
- The vehicle’s owner;
- The odometer reading; and
- The cost of the vehicle;
- Having the vehicle inspected by an authorized representative of the DMV to ensure that the vehicle meets the standards of the State of California and has the correct VIN information;
- Having the vehicle appraised to determine its fair market value, which can be done by a licensed auto dealer; and
- Getting a surety bond for the bonded title. The bond amount is the same as the appraisal value of the vehicle. After obtaining the surety bond, it can be submitted to the DMV, and a bonded title will be issued.
It is important to note that a bonded title does not guarantee ownership of a vehicle and may be disputed. In many cases, bonded titles are considered to be provisional documents.
Bonded titles may also, in some cases, be challenged for a period of time after the certificate has been issued. In numerous states, bonded titles can be challenged up to 3 years after the original issue date.
What Can a Bonded Title Be Used for?
Bonded titles can be used for numerous purposes, which may include to:
Is It Safe to Buy a Car With a Bonded Title?
In general, it is probably safe to purchase a vehicle with a bonded title. These types of disputes are relatively rare. This is because, prior to the bonded title being issued, there is typically some type of investigation conducted into the background of the vehicle by the Department of Motor Vehicles (DMV).
How Are Bonded Title Disputes Resolved?
How a bonded title dispute is resolved depends upon the type of dispute. If the case involves a breach of title, a court may require the owner to transfer valid title to the automobile or car.
If, however, the transaction caused financial losses for the plaintiff, a court may require a defendant to pay a monetary damages award to the plaintiff. This damages award is intended to compensate the non-violating party for losses they suffered, which were caused by the bonded title dispute.
In some instances, a vehicle sales transaction may involve a contract clause that governs dispute resolution. For example, the parties may include a clause in their contract that states whether they are permitted to pursue litigation in a court of law or if they are required to engage in alternative dispute resolution measures.
If this type of clause is included, the parties will be required to adhere to the language which is included in the written sales contract. There are various other penalties that may result if there are other issues, such as misrepresentation or fraud during a sale.
Should I Hire a Lawyer for Help Resolving a Bonded Title Dispute?
Yes, it is essential to have the assistance of an automobile lawyer for any bonded title disputes you may have. All states have different laws governing bonded titles and automobile disputes.
Your lawyer can review your case, advise you regarding the laws in your state, and represent you if you are required to file a lawsuit to recover damages or losses. They can also advise you whether there have been any recent changes or updates to the laws in your state that govern bonded titles.