What Is a Bonded Title?

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 What Is a Bonded Title?

In the context of motor vehicles, a bonded title is a certificate which provides proof of an individual’s ownership of a car, truck, or other type of motor vehicle. A bonded title allows an owner to conduct various transactions legally, including:

  • Selling the motor vehicle;
  • Registering the motor vehicle with a local motor vehicle department (DMV); and
  • Obtaining insurance for the motor vehicle.

Bonded titles may also be known as Certificates of Title Surety. The exact name by which a bonded title is referred to may vary by jurisdiction.

Unlike automobile warranties, bonded titles, in general, do not make any promises or claims regarding the condition of the vehicle, it simply provides proof of ownership of the motor vehicle.

A bonded title may be used in place of a standard vehicle title in order to register a vehicle with the Department of Motor Vehicles (DMV), buy insurance for the car, or sell the car, as previously noted.

In the majority of states, a bonded title may be issued for various types of vehicles, including:

  • Cars;
  • Trucks;
  • Motorcycles; and
  • Some types of RVs.

What Are the Requirements for Obtaining a Bonded Title?

In most cases, a bonded title can be obtained by filing with the DMV. Although the laws may vary by state, the main requirements for obtaining a bonded title typically include the following:

  • Making a diligent effort to obtain the original vehicle title and any supporting documents by contacting the prior owners or relevant authorities using certified mail. It is important to keep any receipts of the certified mail sent;
  • Obtain the relevant forms from the local DMV. In California, a Form REG 256, or Statement of Facts, is required if the vehicle an individual wants a bonded title for is valued at or less than $4,999. Another form, Form REG 5057, is required if the vehicle is valued at $5,000 or more;
  • The vehicle must have been received as a gift or have been purchased. An individual usually cannot file for a bonded title if the vehicle in question was abandoned; and
  • Some states may require that an individual pay certain taxes before they are issued a bonded title.

It is important to note that a bonded title does not provide an absolute guarantee of ownership of a vehicle and may be disputed. Bonded titles, in the majority of cases, are considered to be provisional documents and may, in certain cases, be challenged for some time after a certificate has been issued.

In many states, a bonded title may be challenged up to three years after the original issue date.

Typically, it is necessary to file for a bonded title with a Department of Motor Vehicles (DMV) or equivalent agency. The bonded title process usually involves steps, including:

  • Purchasing a vehicle or receiving it as a gift;
  • Making a legitimate effort to obtain the original title before applying for a bonded title; and
  • In some regions, payment of certain taxes.

Because of this, there typically needs to be a transfer of ownership from a legitimate owner to a new owner in order for the bonded title to be issued. In other words, as noted above, bonded titles are generally not issued for an abandoned vehicle.

How Long Does it Take to Get a Bonded Title?

The amount of time it will take a DMV to issue an individual a bonded title will vary depending upon their process and how fast the individual’s paperwork is approved. In general, it may take as little as 1 week to as long as 4 weeks.

What Can a Bonded Title Be Used For?

There are various things that a bonded title may be used for. These purposes include:

What if I Have a Dispute Over a Bonded Title?

A bonded title dispute may arise during a transaction which involves the transfer of a car or another type of automobile. The bonded title provides legal proof that the individual is the actual owner of the vehicle.

Therefore, a bonded title dispute may arise when the ownership of the vehicle is debatable. This may happen is situations including:

  • Used car scams, for example, selling vehicles with fraudulent titles;
  • Misrepresentation when selling a vehicle, for example, selling title to a different vehicle;
  • Various insurance disputes; and

Cases involving some sort of breach of contract, such as failing to deliver title after a dispute.
These legal remedies may depend upon the actual dispute which arises. If the case involves a breach of title, a court may simply require the owner to transfer valid title to the vehicle or automobile.

If, however, the transaction has caused the plaintiff to suffer a financial loss, a court may require a defendant to pay monetary damages to the plaintiff in order to compensate them for that loss which was caused by the bonded title issue.

In certain cases, a vehicle sales transaction may involve a contract clause which involves dispute resolution. For example, the parties to a contract may include a clause which provides guidance regarding whether or not the parties are permitted to pursue litigation or whether they are required to engage in alternative dispute resolution (ADR) measures, such as mediation or arbitration.

If a contract did contain such a clause, the parties would be required to adhere to the language which was provided in the written sales contract. There are also various other legal penalties which may result for other issues, including misrepresentation or fraud during a sale.

A dispute over a bond for title is generally handled like any other dispute involving a contract agreement. The parties may be required to file a lawsuit in order to determine whether either of the parties violated a term of their agreement.

In the event of a breach of contract, the non-breaching party may be entitled to receive a damages award for their losses. This process will likely require an in-depth analysis of the documents as well as an examination of additional items of evidence.

A bonded title dispute may also be a major part of certain legal claims such as:

In these types of claims, a lawsuit may result and the non-breaching party may receive a damages award. This may help the non-breaching party recover losses which were caused by the breach of contract or fraudulent bonded title.

Do I Need a Lawyer if I Have Any Legal Issues Related to a Bonded Title?

It is essential to have the assistance of a products and services lawyer for any legal issues you may have related to a bonded title. Bonded titles can be very helpful if you are involved in certain types of legal disputes, as they may clarify who is the proper legal owner of a vehicle.

Your attorney can advise you regarding the laws in your area governing bonded titles as well as other types of vehicle certificates. Your attorney can also assist you if any legal disputes arise regarding a bonded title you may have.

Your lawyer can also help you file a lawsuit to recover damages you incurred due to a bonded title issue. If this is necessary, your lawyer will represent you when you are required to appear in court.

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