When it comes to title recovery, we find that most people gravitate to the Vermont registration process rather than a bonded title. What’s the big deal? Why don’t more people have a bonded title? There’s nothing wrong with having a bonded title, in fact, oftentimes a bonded title is a cheaper and more convenient way to get a title. Let’s take a look at how these title recovery processes work.
What is a bonded title?
A bonded title, also known in some states as an affidavit title, is a type of title recovery method that requires the purchase of a surety bond, also known as a vehicle title bond, to secure the ownership of the vehicle. This is because, in order to receive a bonded title, you must have a major lack of proper documentation.
The DMV in your state is essentially taking your word that you are the owner of the vehicle. The vehicle title bond provides security for the DMV to assign ownership in the event that there is an ownership discrepancy after the bonded title is issued.
Bonded title requirements
The bonded title process is the most direct method of title recovery. To apply for a bonded title, make sure that your vehicle meets the requirements of your state. Typically the requirements for a bonded title include:
- The vehicle is operable
- The vehicle has no permanent title brands
- The vehicle has no liens
- The vehicle is located in the state where the application is processed*
- The applicant applying for ownership is a resident of the state*
*The only state that is an exception to this rule is Vermont. Out-of-state residents can obtain a bonded title in Vermont.
In addition to the physical and title requirements, a bonded title application also includes:
- Proof of title bond purchase
- State title application
- Bonded title application documents (specific to each state process)
How to get a title bond
A title bond is a surety bond specifically used to secure ownership of a vehicle. A title bond can be purchased by a title bond company such as ProBonds.com, or through most insurance carriers.
Most title bonds are required to be valued at 1.5x the value of the vehicle. However, this doesn’t mean if your vehicle is worth $5,000 that you’ll have to pay $7,500 for your title. You will only be required to pay a portion of that value upfront, typically a title bond will cost around $100-$150 to obtain.
A title bond is essentially a form of insurance. You purchase the title bond to say to the DMV that you are the correct owner. If someone else comes forward with a substantiated ownership claim, that title bond will cover the damages for the DMV. However, you’ll be on the hook for repaying the bond amount.
How does the bonded title process work?
To apply for a bonded title, first, check your state’s requirements to ensure that your vehicle is eligible. Next, follow the necessary steps to complete the documentation required by your state and submit it to the DMV before purchasing your title bond. Once your application has been approved by the DMV, they will tell you the value of the title bond to purchase. After purchasing your bond, you can then complete any remaining activities designated by the DMV and submit all documents plus your proof of title bond.
What states accept bonded titles?
The states that allow for a bonded title are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Rhode Island, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin, and Wyoming.
What is the Vermont registration process?
The Vermont registration process, also known as the Vermont title loophole, is a method for out-of-state residents to get a title for an older vehicle when all they have is a bill of sale. Typically, to transfer a title you must have the prior title signed over by the prior owner, however, the Vermont registration process waives this requirement.
How does the Vermont registration process work?
Vermont is a non-titling jurisdiction, meaning it does not produce titles for vehicles that are 15 years old or older. Instead, Vermont produces a registration that is a legal equivalent to a certificate of title. With this title equivalent document, out-of-state applicants can submit that document to their local DMV in lieu of a signed title to transfer ownership to their state.
To use the Vermont registration process, your vehicle must meet the following requirements:
- The vehicle model must be 15 years old or older
- The vehicle must be whole and operable (not in parts)
- The vehicle must not have a permanent title brand
- The vehicle must not have a lien
The only documentation required to use the Vermont registration process is a bill of sale and VIN verification. The bill of sale does not have to be typed or notarized.
If your vehicle meets the requirements and you have a bill of sale, submit the application for title to the Vermont DMV using the correct book value for your vehicle. The Vermont DMV will process your application and if approved will send you a new registration and temporary plates for your vehicle. Once you receive the documents from Vermont, take them to your local DMV to transfer to your state as soon as possible.
Should you get a bonded title or use the Vermont registration process?
To answer this question, there are a few things to ask yourself:
#1: How much time do you have?
If you’re looking for a title, it’s probably because you need one quickly. A bonded title usually takes 1-2 weeks to receive, depending on the situation and location of the DMV. This is because it’s a straightforward process with your state’s DMV. The Vermont registration process requires your paperwork to be sent to Vermont and will take about 4-6 weeks to process. From there, you won’t have a title in your state yet, you’ll have to take a trip to the DMV to transfer it to your state which will take a bit more time.
If you’re short on time, and your vehicle qualifies in your state, consider a bonded title.
#2: How much money do you have set aside for taxes and fees?
If your state charges sales tax, you’re going to have to pay sales tax no matter what. However, if you’re using the Vermont registration process, you’ll have to pay a 6% sales tax to the state of Vermont for the full book value of the vehicle including a registration fee based on vehicle type and weight.
#3: Are you okay with a bonded title stamp on your title?
While a bonded title brand isn’t anything close to a salvage title or junk title brand, many people don’t know what a bonded title brand is. If you’re looking to sell the vehicle with a bonded title, your buyer may be skeptical as to what that actually means for them down the road.
The bonded title brand typically stays on the vehicle title for 3-5 years. After this period of time, it can be removed so you can have a clean title in your name. If you’re selling the vehicle with a bonded title, make sure that you plan to educate your buyer on the bonded title process.
There are many ways to get a title for a vehicle when you are missing evidence of ownership. If your state allows for it, consider a bonded title as a valuable alternative method of title recovery. In many cases, a bonded title is the cheapest, easiest, and fastest method to get a title from the DMV. Remember, until you have a certificate of title in your name, you’re not the owner. If it’s your car, you deserve a title in your name.