A bonded title is another name for a document known as a Certificate of Title Surety. Utilized in lieu of a standard car title, obtaining the bond makes it possible to move forward with registering the motor vehicle with the local Department of Motor Vehicles or DMV. The document also serves as proof of ownership, making it possible to purchase insurance for the vehicle.
In many locations, it is possible to obtain a bonded title for a number of different types of motor vehicles. Along with cars, trucks, buses, and travel trailers are also eligible. It is not unusual for a jurisdiction to also approve a title bond for motorcycles and campers.
While each jurisdiction sets their own criteria that must be met in order to qualify for a bonded title, there are a few requirements that appear to be common to most locations. First, an attempt to locate a legitimate car title must be made before application for the bond is made. Second, the vehicle must be bought or received as a gift; it is usually not possible to obtain a bonded title on any vehicle that is found abandoned. Last, the local jurisdiction is likely to require the payment of taxes that are in excess of the current value of the vehicle; this is different from the usual practice in many jurisdictions that based the applicable taxes on the current assessed value of the vehicle.
It is important to note that while a bonded title does help to establish car ownership, the document is not considered to be on a par with a car title. To a degree, the bond document is a provisional title of ownership that can be challenged for some period of time after the document is issued. In many jurisdictions, it is possible for a bonded title to be challenged for up to three years after the issue date. Detailed information is typically provided when an application for a bonded title is requested from the local tax or DMV office.
After the period specified by the local jurisdiction to challenge a bonded title has passed, it is possible to convert the provisional title into a standard car note or title. Generally, this time period is deemed sufficient for anyone with a legitimate claim to the vehicle to come forward and take legal action to establish that claim. If the claimant is successful, the bonded title usually is declared null and void and the owner recognized by the court can proceed with registering the vehicle in his or her name.