How to Clear Problems on a Car Title

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Several problems may appear on the face of a car title that could prevent you from transferring title into your name, or prevent the car from being legally insured or driven. These problems include a false name on the title document, an unavailable or deceased owner, and a "salvage" notation on the title. Problems with the name on the title document can usually be cured by purchasing a surety bond and applying for bonded title.

Things You'll Need

• Personal records
• Car title
• Car

Instructions

1. Examine the inner and outer surfaces if the car (including the engine) for the engraved 17-digit Vehicle Identification Number. Use a pencil to make a carbon etching of the VIN, and run an online Vehicle History Report on it (see Resources section). This report will provide a description of the car, list the name of the last legal owner, and tell you whether the car has been reported stolen in any state. Confirm that the car has not been reported stolen, and compare the description and the owner's name with your title document to make sure they are identical.

2. Find out which authority in your state issues bonded titles. This is often the state Department of Motor Vehicles.

3. Download and print a statement of physical inspection from the website of your state's bonded title authority. You will need to list the car's make, model, year, color, and VIN. You may be required to include an etching of the car's VIN and a copy of the Vehicle History Report.

4. Download and print an owner's affidavit from the website of your state's bonded title authority. You will need to state whether the car has been reported stolen, whether any liens have been placed against it (this information is included in the Vehicle History Report), facts about its physical condition, and how you came into possession of the car. Fill out this affidavit and sign it in the presence of a Notary Public.

5. Gather the statement of physical inspection, the owner's affidavit, proof of your ownership of the car (such as a bill of sale), and proof of your state residence (a state driver's license or a valid lease agreement will suffice). Deliver these documents to your state's bonded title authority, and they will notify you by mail of the amount of the bond.

6. Take your notification letter to any car insurance company that offers surety bonds (most do), and purchase a surety bond in the required amount. you should also purchase liability insurance for the car. You can do this before you title the car in your name.

7. Take your surety bond receipt and proof of insurance to your county tax collector's office and fill out an application for bonded title. Turn in your current title document, and a bonded title in your name will be mailed to you within a few working days.

Tips & Warnings

• If your title is listed as a "salvage" title (this word should appear on the face of the title), it has been totalled at some point in the past and cannot be insured or driven until good title is restored. You will have to repair the car to roadworthy condition, have it inspected by a state-certified inspector, and apply for a "rebuilt" or "restored" title. Exact procedures vary according to state.

• The bond amount for a bonded title will probably exceed the book value of the car.

• If another title claimant sues you for title and wins, the judgment will come out of your surety bond. In most states, you bond will be returned to you if no claimant appears during a statutory period.

References

• The Unofficial DMV Guide: Bonded Title Information by State
• Car Insurance Rates: What is Salvage Title?

Resources

• Texas Department of Insurance: Bond Resources - Agent and Company Contact Information
• CarFax: Online Vehicle History Report