Bonds are a confusing topic. There are surety bonds for various purposes, one of which is for vehicles. A title bond—also known as a "Certificate of Title Surety" — is a type of surety bond. You may need a title bond if your vehicle's title is:
- Missing
- Defective
- Illegible
- Incorrect
If the former owner of the vehicle did not transfer the title or you purchased the vehicle and received only a receipt, you may need a title bond.
A title bond is proof that you own the vehicle and will replace the missing or defective title. You need a title or title bond for a car in order to insure, register or sell it. A title bond allows you to bypass a trial and receive a title quicker.
How Do You Get A Title Bond?
There are certain steps you must follow in order to get a title bond for your vehicle. Some of these steps and requirements vary per state, but in Texas, you must:
- Make sure you're eligible. Those who can receive a title bond in Texas are either Texas residents, stationed in Texas through the military or have a vehicle that was last titled in Texas. You do not qualify for a title bond if the vehicle is stolen, abandoned or under other pending lawsuits.
- Purchase a surety bond by providing evidence of your title claim. Example of this can include a bill of sale or copy of the original title. This evidence should be mailed to the DMV along with proof of physical inspection, proof of fact for bonded title, and a copy of your photo ID. There may be an administrative fee as well. Be sure to check your DMVs website for their title bond requirements. After you receive your surety bond, you have 30 days to apply for a title bond.
- Provide the nearest county tax office with documentation. This includes the statement of fact for bonded title, statement of physical inspection, evidence (such as a receipt or copy of the old title) and a copy of your photo ID.
Texas requires you to have a bond worth 1.5 times your vehicle's value. For example, if your vehicle is worth $40,000, you must have a bond worth $60,000. In Texas, vehicles that are appraised for less than $4,000 will be rejected.
How Much Does a Surety Title Bond Cost?
Depending on how much the coverage is, your bond may cost $100 for $6,000 in the vehicle's value and $15 for each additional $1,000. Speak with a representative about filing for a title bond. There is no monthly payment for a title bond. If the bond must be higher than $25,000, an underwriter from the insurance company will review your qualifications to provide a better quote.
What Is The Difference Between A Bonded Title And A Regular Title?
A bonded title is a car title that is bonded with a surety bond. Both titles allow you to register, sell and insure the vehicle. Bonded titles generally remain valid for three years, which carries over if you sell the vehicle before those three years are over. After this period, the new owner of the vehicle can claim the vehicle as their own.
Surety bond requirements and limits vary per state. Decide whether you or your vehicle qualify for a surety title bond by checking with your state and local DMV. If the previous owner appears to claim the vehicle, the surety offers them compensation for providing you a title bond. In return, you will have to repay your surety company. This is only if you are found to not be the owner of the vehicle.