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An Alabama title bond, sometimes called a “lost title bond” or “certificate of title bond,” is the solution you’re looking for if you own a vehicle that lacks a valid title. The bond is a prerequisite for obtaining a bonded title that will enable you to register, sell, donate, or otherwise transfer ownership of the vehicle to another party. A bonded title, issued by the Alabama Department of Revenue, looks just like a regular title except for bearing a “Bonded” brand.
The problem is that if someone else can prove that they own the vehicle, the Department of Revenue could be held liable for having issued you a bonded title if doing so caused the rightful owner to suffer a financial loss. An Alabama title bond protects the Department (the “obligee” in the language of surety bonds) against such liability and provides a source of funds for compensating the rightful owner for any loss.
There are several reasons why you might need a bonded title:
To do anything with the vehicle, you must purchase an Alabama title bond and obtain a bonded title. The bond must have a duration of three years from the date of purchase.
Before you can purchase an Alabama title bond, you must first submit an online request to the DMV. No such request will be honored unless you have a bill of sale showing the vehicle identification number (VIN).
The DMV will use the information you provide about the vehicle to generate a customized bond form that you must give to your chosen surety bond company. The form will include the required bond amount established by the Department of Revenue based on the vehicle’s appraised value.
During the three years that your Alabama title bond is in force, anyone who can prove ownership of the vehicle can file a claim against the bond. If the surety bond company finds the claim to be valid, that person is entitled to recoup any loss incurred as a result of your actions in representing the vehicle as belonging to you.
The terms of the surety bond agreement make you (the “principal”) legally responsible for paying any valid claim, but the surety bond company (known simply as the “surety”) most likely will do that on your behalf. In doing so, the surety is extending you credit, which creates a debt that you must repay to the surety.
If the Alabama title bond you need is for $25,000 or less, there is no underwriting. The price of the bond is a one-time premium calculated at 1.5% of the bond amount, with a minimum of $100.
Title bonds for more than $25,000 do go through underwriting to determine the premium rate. If your personal credit score is good, you’ll probably pay a premium that’s between 1% and 3% of the required bond amount.
Request a convenient online quote today, or call us to discuss the Alabama title bond you will need to obtain a bonded title for your untitled motor vehicle.