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Lost Title Bond

Lost Title Bond

Lost title bonds are used by a state's Department of Motor Vehicles (DMV). The surety bond may be required when the ownership information on a vehicle title does not match the party claiming ownership. Lost title bonds may also be required to gain a new title to a vehicle when no existing title can be presented.

What is a Lost Title Bond?

It's essentially a financial guarantee that whoever holds the bonded title will pay anyone who files a valid claim against the bond. State DMVs often require someone to obtain a lost title bond before they will grant a replacement title. That way, if someone else proves they are the owner of the vehicle, they can file a claim against the bond seeking financial compensation. DMVs take a risk when they issue a replacement title because someone can falsely claim to own a vehicle. Since the bond holds them financially accountable, however, DMVs feel more comfortable issuing a replacement title.

How does a Lost Title Bond work?

A car title bond provides security to anyone who can verify true ownership interest in the vehicle other than the party that transferred ownership through the bonded title process. This means that if someone other than the owner showing on the bonded title can show they are the true owner, that party can claim on the bond up to the bond amount.

A claim made on a lost title bond is handled by the surety, the guarantor of the bond. The surety will determine if the claim is valid. If the claim is found to be valid, the surety will pay the claim. The surety will then collect the amount expended resolving the claim from the principal, the party that transferred ownership via the bonded title process with the DMV. The principal is ultimately financially responsible for the amount expended by the surety to resolve a valid claim.

Who should get a Lost Title Bond?

When a vehicle is purchased that requires registration with a DMV office, the vehicle's title is used to establish and/or transfer ownership of the vehicle. There are situations where verifying ownership using the title cannot be accomplished such as:

  • An individual buys a car but does not receive the title at the time of purchase.
  • An individual purchases a car but receives a title that is assigned to the wrong person.
  • An individual buys a car and receives the title but loses the title before the vehicle is transferred into his or her name.
  • A title is lost, stolen or deemed defective.

When these, and other similar, situations arise, DMV offices can require vehicle ownership be determined using the bonded title process. This simply means that the current owner of the vehicle must obtain a vehicle title bond before a new title document can be created showing the correct vehicle ownership.

Who are the parties involved in a Lost Title Bond?

Surety bond agreements like this one always involve three parties:

  • Principal - The person seeking the replacement title who must obtain the bond. As the bond title holder, the principal must pay for all valid claims.
  • Obligee - The person allowed to file claims against the bond if they believe themselves to be the true owner of a vehicle. If those claims prove true, the surety guarantees payment to the obligee.
  • Surety - The company that issues the lost title surety bond and guarantees payment for valid claims. When the surety does pay, the principal must pay that amount back, often with interest and fees added.

What is the Purpose of a Lost Title Bond?

A lost title bond protects against the risk of fraudulent titles. Whenever the DMV issues a replacement title, there is a chance that the original title will reappear and call vehicle ownership into question. As the agency responsible for sanctioning and streamlining vehicle sales, the DMV needs a way to discourage people from seeking fraudulent titles and holding them accountable when they do. Lost title surety bonds help on both fronts. They make it less lucrative for people to try and get fraudulent titles by holding them financially accountable for any damages that result. Surety bonds also guarantee payment to the DMV, or the negatively affected party, for valid claims, which would be difficult or impossible to pursue by other means. Time has shown lost title bonds to be an effective regulatory mechanism. That's why DMVs across the country require them before issuing a replacement title.

How much does a Lost Title Bond cost?

The cost of a lost title bond is dependent on the bond amount and credit standing of the principal. The bond amount is determined by the DMV and is typically based on the fair market value of the vehicle in question. For many less expensive vehicles with relatively low bond amounts, the cost of a lost title bond is around $250 with some quotes coming in lower or higher. For more expensive vehicles with higher bond amounts, lost title bond quotes typically range from 1% to 3% of the required bond amount. This means that a vehicle with a required bond amount of $100,000 would often be quoted from $1,000 to $3,000. These are typical ranges and quotes can come back lower or higher than the range since credit does play a role in the amount of the quote. Typically though, the better the applicant's credit, the lower the quote.

Can you get a Lost Title Bond with bad credit?

Viking Bond Service provides title bonds to applicants of all credit standing. Larger title bonds, bonds over $25,000, are underwritten more strictly however. More scrutiny is given to the applicant's credit and financial standing. For larger lost title bonds, the better the credit and financial standing of the applicant, the better the price of the bond.

That being said, don't assume that a low credit score or financial mistakes from the past will make someone ineligible for a bond. Poor credit standing will lead to higher costs, but it doesn't have to make getting a lost title bond impossible. Viking Bond Service has a special bad credit surety bond program designed to help more applicants get the bond they need even with bad credit. Approval can't be guaranteed. However, we do promise to give everyone a close and fair evaluation that views credit as one of several considerations. If you've been denied a bond elsewhere, Viking Bond Service is here to give you a second chance.

How are claims handled for Lost Title Bonds?

When the surety receives a claim, it launches a thorough investigation to definitively prove whether the claim is true. In the case of a surety bond for lost title, that means the surety investigates whether the obligee (the claimant) actually owns the vehicle, rather than the principal who claims to. By the terms of the bond, the surety commits to pay for all valid claims up to the bond total. However, that does not mean they accept the final financial liability. The principal must always pay the surety back in full, often with the cost of investigating the claim added to the bill. Interest may also be included, meaning that the cost of the claim to the principal could actually higher than the cost to the surety. Avoid this cost by doing everything possible to avoid claims. When claims do arise, settle them directly with the DMV rather than going through the surety.

Can I Sell a Car that has a Lost Title Bond?

A lost title bond, or a "bonded title", functions like a normal title would: you can use it to register a vehicle or sell it. The main difference is that on a bonded title, your name may remain on the bond for the duration of the bond, which is typically 3-5 years. You still may be liable for claims made against the bond during this time, even if you've sold the car. Our bonding experts are happy to answer any questions you may have about this.

How to apply for a Lost Title Bond?

Lost title bonds are easy to obtain. They typically only require a lost title bond application. Once the application is received, the applicant's credit is taken into consideration. This credit check doesn't affect the applicant's credit. Lost title bond quotes are usually returned very quickly, less than a day. The whole bonding process can be started and completed in one or two business days.

Viking Bond Service - A Nationwide Surety Brokerage

Viking Bond Service has provided our clients with lost title bonds for over a decade. We can get our customers bonded quickly and we try to keep the process as simple as possible. We recognize that lost title bonds can be a lifesaver in a difficult situation. That's why we're committed to providing a superior surety bond experience, no matter what state you're in. If you need a lost or defective title bond, contact us through the contact form on this page or by calling 888-278-7389.

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