Arkansas - Certificate of Title Bond 

What Is a Certificate of Title Bond?

A Certificate of Title Bond, often referred to as a bonded title, is a surety bond required by the Arkansas Department of Finance and Administration (DFA) when an individual cannot provide a standard title for a vehicle. The bond acts as a financial guarantee that protects prior owners, lienholders, or other parties in case of ownership disputes or fraud.

The bond does not insure the vehicle owner; instead, it safeguards third parties. If a valid claim arises, the surety company pays the claimant up to the bond amount, and the vehicle owner must reimburse the surety company for the payout.

When Do You Need a Certificate of Title Bond?

You may need a bonded title in Arkansas if:

• The original title is lost, stolen, or destroyed.

• The vehicle was purchased without receiving a title.

• The title is defective (e.g., incomplete or inaccurate information).

• Ownership history is unclear or unverifiable.

Steps to Obtain a Certificate of Title Bond in Arkansas

1. Verify Eligibility: Contact the Arkansas DFA to determine if you are eligible for a bonded title. You’ll need to provide details about the vehicle, including the Vehicle Identification Number (VIN), make, model, and year.

2. Appraise the Vehicle: The bond amount is typically set at 1.5 times the appraised value of the vehicle. You can obtain the appraised value through a licensed appraiser or by consulting resources like the National Automobile Dealers Association (NADA) or Kelley Blue Book.

3. Purchase the Bond: Work with a licensed surety bond company to purchase your Certificate of Title Bond. The cost of the bond, or premium, is usually a small percentage of the bond amount (e.g., 1-10%), depending on your credit score and financial history. For example, a $15,000 bond might cost $150-$1,500.

4. Submit Documentation to the DFA: Prepare and submit the following:

   • The bond document from your surety company.

   • A completed title application (Form 10-381).

   • Proof of ownership, such as a bill of sale or canceled check.

   • Vehicle inspection form, if required.

   • Applicable fees.

5. Receive the Bonded Title: Once the DFA approves your application, you’ll receive a bonded title. This title will be marked as "bonded," indicating the presence of a Certificate of Title Bond.

Important Considerations

• Validity Period: In Arkansas, a bonded title is valid for three years. After this period, if no claims are made against the bond, the "bonded" notation is removed, and you can request a standard title.

• Transfer of Ownership: If you sell the vehicle before the three-year term expires, the bonded title transfers to the new owner, and the bond remains active.

• Claims Against the Bond: If a valid ownership claim is filed, the surety company investigates and compensates the claimant if necessary. You are financially responsible for reimbursing the surety company for any payouts.

Benefits of a Certificate of Title Bond

A Certificate of Title Bond ensures that you can:

• Legally register and drive your vehicle in Arkansas.

• Protect potential claimants from financial harm.

• Resolve title issues without lengthy legal disputes.

Conclusion

The Arkansas Certificate of Title Bond is a crucial solution for vehicle owners facing title-related challenges. It provides a clear path to obtaining legal ownership while safeguarding the interests of prior owners and lienholders. By understanding the process and requirements, you can navigate the bonded title system efficiently and avoid potential complications.

Frequently Asked Questions

Can I get a bonded title for a vehicle purchased out of state? 

Yes, but the process may require additional documentation, such as proof of the vehicle’s origin and VIN verification, to comply with Arkansas regulations.

What happens if my bond application is denied? 

If the Arkansas DFA denies your application, you can appeal the decision or seek legal advice to explore other options for proving ownership, such as filing a quiet title lawsuit.

Does a bonded title affect the resale value of my vehicle? 

While a bonded title may slightly deter some buyers, many are willing to purchase vehicles with bonded titles, especially if the bond period is nearing expiration or if the vehicle’s history is well-documented.