The specific steps to get a bonded title vary by state. In most states, however, the vehicle’s purported owner must purchase a lost title surety bond. The amount of the bond is based on the value of the vehicle. The required term (duration) of the bond varies but is typically three or four years.
At any point during the bond’s term, someone could show up with evidence of their legitimate ownership of the vehicle. If that person is proven to be the rightful owner, they can file a claim against the lost title bond and be compensated for any financial loss incurred as a result of a bonded title having been issued.
If that should occur, both the state (the “obligee” in the surety bond agreement) and the surety bond company (referred to simply as the “surety”) are held harmless. Full legal responsibility for paying the claim rests with the bonded individual (the “principal”). However, the surety will pay the claim in advance—essentially lending that amount to the principal—to be reimbursed by the principal.
At the end of the bond’s three or four-year term, if nobody has surfaced to dispute the vehicle’s ownership, the bond expires and the bonded title is exchanged for a regular, unbonded title.