So there’s a really good deal on Craigslist from some folks who never transferred the title to their name. I want to pick it up tomorrow but wanted to understand my options first.
Is a bonded title the way to do it, seems relatively cheap on the outside?
Is there a way to fix the existing title? The current owners never transferred it to them and its out of date.
I guess the original title is salvage because of a wreck, does that matter?
You won’t be able to insure the vehicle for collision - not that it may matter. If you are going to register it you may have get a bonded title. Not sure how long an open signed title can be held if not a dealer or distributor or salvage yard. If it doesn’t expire, you may be able transfer it.
Collision insurance? Pffft this is a sporty beater 
As far as I know, you have a time limit on the date the title was signed. The new owners apparently signed the title too? I’ll know more tomorrow.
Several points here:
Once the title is signed, the new (undersigned) owner has 21 days to apply for the title. Beyond that, they face additional tax penalties for late application.
If the title is signed in the Purchaser field, they have to apply for title, receive the new title, and transfer that title to you. The state collects taxes and penalties on both ends.
A Salvage title can’t be made clean again. The only change that can be made is Rebuilt Salvage, which requires a specific type of inspection certifying the vehicle, and is basically pointless since a Rebuilt title won’t fetch any more than a Salvage title anyway.
Get a bonded title in any of these circumstances. An application for Bonded Title does not require the old title, only an inspection and proof of ownership. The latter can be a bill of sale, photos of the vehicle stored on your property, or a number of other things proving you purchased the vehicle in good faith and own it. You will need to purchase a surety bond for 150% of the Standard Presumptive Value of the vehicle and present proof of bond ownership to the DMV as well during the application process. Contrary to popular belief, a bonded title can be transferred, as long as the bond is transferred with it.
I had to get a bonded title on a ZJ one time because the previous owner had never transferred the title and I didn’t have enough cash to get that resolved within 21 days. The total cost for the bond, bonded title app, taxes, and so forth was about $300. Which was less than the $500 in tax penalties alone (not including the sales tax or title fee) they were going to assess on a standard title application.
Several excellent points. I’ve often wondered what one did with a “no title” sale and what one would be getting into.
Thanks for sharing your knowledge and experience.
I have a slightly off-topic followup question:
If one DID want to insure it, is there a way to check whether the vehicle has a salvage title (vs no title/ownership transfer being recorded) before purchasing? Through the State using the vehicles VIN, perhaps?
Assuming no salvage title was issued due to being totaled, can one insure a bonded-title vehicle?
A vehicle with a bonded title can be insured against damage for its full market value. Additionally, after 3 years, a bonded title becomes a regular title. Of course, if the original title is a salvage title, the bonded title will be a bonded salvage title.
The purpose of a bonded title is to protect the interests of the owner on the original title, in the event that the vehicle was stolen or otherwise lost. In the event that the rightful owner claims that they should still own the vehicle, they are instead entitled to the bond, which is worth 150% of the presumptive value of the vehicle at the time of title application. They may still file a civil case against the new owner, but this is rare. After 3 years, any claim the original owner had is forfeit.
Okay so example scenario:
Buy car for $1000 cash
Presumptive Value from DMV is $1000
Surety bond is $1500
Total cost: $2500 cash + fees?
You can buy a bond.
Buy car for $1000 cash
Presumptive Value from DMV is $1000
Surety bond is $100
Total cost: $1100 cash + fees?
Not sure of presumption value or exact cost of bond, but that sounds right. You don’t have to post the full amount, you buy the bond.
Thanks! I was definitely getting confused reading through all of this lol
Thanks to @suchsojasco also!
Now go buy that heap and drag it home!
Don’t run into the problem one of my friends had. He delayed getting his new title and waited until he had invested a whole lot more into his souped up car. He had the new photos of the car which surely did not look like the $1,000 heap he originally purchased. The final assessed value of his car was now higher than his purchased price which cost him more in taxes and penalties.
If you purchase a vehicle and get a bonded title you’re ultimately liable for any outcome. Like if the estranged significant other is the actual owner and wants it back and wants to ruin your day because they can. So it’s the costs already mentioned plus you could lose it all. I’m not saying don’t buy it. Just saying you’ll want to be okay with potentially losing it all (plus paying back the full bond amount). One more thing, the bond amount is based on multiple estimates. Not the sale price. So it might be more than the sale price.
Check out Jackie’s Texas Auto Title. This local service can handle everything for you, knows the laws of Texas, and can keep you out of trouble. They specialize in lost auto titles, bonded titles, replacement titles, title transfers, and registrations…a real one stop shop for titles. They have a booth at every major Car Swap Meet including the Pate Swap Meet that is coming up the end of April (26th thru 29th) at the Texas Motor Speedway. I have worked with them in the past.
The bond value is typically based on the state’s Standard Presumptive Value, though other estimates might place it higher. Though the purpose of the bond is to ensure that, in the event the original owner does come calling, somebody can cover the claim. They can’t necessarily take the car, but they can make a claim for the bond value, which the surety company would pay out if you were unable, and then they would go after you. While it is possible for them to deny the bond and file a civil case demanding the car itself as relief, it’s usually unlikely.
There are a few other caveats. For example if the car is over 25, the state will have to appraise it, and if the value is under $4,000, a bonded title will not be approved. You would have no recourse in this circumstance.
All of the above having been said, if you have the original title that has the old owner’s signature on it, that’s evidence of forfeiture on their part, so they wouldn’t be able to claim the bond, for example. This is a good reason to not provide the original title as proof of ownership.
An alternative to all of this would be to find the original owner and have them certify that since the title was never transferred to the people you’re buying from (ie, he still owns it) he grants the title to you. I had to do this once, we opted to have the certified statement notarized, and it made things nice and slippery at the DMV. But in that case, finding the original owner was easy enough since he had a facebook account. Your mileage may vary.
What’s the bucket in question @LukeStrickland?
Want to see Tom weigh in here, especially after seeing this…
I use a title service like Rich Meyer suggests, except the one I use in not in Texas. It takes about 3-4 weeks, total cost is $245 to $250 for a car, truck or Airstream trailer.
Every one has their onion & preference - mine works for me