An Arkansas Certificate of Title Bond is a surety bond that is used when the state of Arkansas cannot verify the genuineness, regularity, and legality of a vehicle title or is not satisfied that the vehicle is free of undisclosed security interests. The bond acts as a financial guarantee for any party harmed by the state’s issuing of a title for the vehicle under Arkansas Code 27-14-409(c). These bonds are commonly referred to as vehicle title bonds, defective title bonds or bonded title surety bonds.
The bond is conditioned to indemnify any prior owner and lienholder and any subsequent purchaser of the vehicle, or person acquiring any security interest in it, and their respective successors in interest, heirs, or assigns against any expense, loss, or damage, including reasonable attorney's fees, by reason of the issuance of the certificate of title of the vehicle.
An Arkansas Certificate of Title Bond is a three-party agreement between a principal, a surety bond company and an obligee. The party needing a certificate of title is known as the principal. The principal pays money called a premium to a surety bond company and agrees to indemnify the bond company against losses. In return, the bond company provides a financial guarantee to the state of Arkansas, known as the Obligee.
The bond provides protection to any party harmed by the state’s issuing of a Certificate of Title where ownership of the vehicle, or a security interest of the vehicle is in question. A damaged party can make a claim against the title bond. In such cases, the surety will investigate the claim and pay the damaged party. The surety can then seek to be reimbursed by the principal under the indemnity agreement. The certificate of title bond provides valuable protection. Surety bond companies and licensed and rated for their ability to pay claims. A damaged party will usually find it much easier to collect from a surety company than trying to collect directly from the principal.
An example of a claim against an Arkansas Certificate of Title Bond would be if a vehicle is sold to the buyer, and subsequently discovered that the seller was not the rightful owner of the vehicle. The buyer could then make a claim against the surety bond for defective title and get reimbursed for damages.
An Arkansas Certificate of Title Bond must be at least 1.5x the vehicle’s value as determined by the Department. The amount of the bond is the most the bond company must pay regardless of the dollar amount of claims, or number of claims filed. This is referred to as the bond penalty.
Arkansas Certificate of Title Bonds are easy to obtain for most. Most amounts can be purchased online instantly, and without a credit check. Applicants will need:
The applicant can complete the online application, purchase the title bond and print the bond within a few minutes.
Larger certificate of title bonds may also be purchased online. However, some may require a personal credit check of the applicant.
Most Arkansas title bonds can be purchased without a credit check. Only very large amounts may require any check at all. Axcess Surety understands that credit challenges can happen to anyone. We work with bond companies for those in almost all situations and can help applicants who have had past credit issues and bankruptcies in most cases. Contact us today to learn how we can help.
Most applicants can purchase a Colorado Certificate of Title Bond for 1% of the bond amount. For example, a $20,000 title bond would cost $200, while a $30,000 title bond would cost $300.
An Arkansas certificate of title bond must remain in place for a period of three years unless there is a pending claim, or reason to believe a claim exists. At the end of three years, the bond may be returned and the “bonded title” may be removed. Even if no claim exists on the title surety bond, the bond premium is considered fully earned and not returned to the principal.
Arkansas will allow an applicant to post an Irrevocable Letter of Credit (ILOC) or Certificate of Deposit (CD) instead of a surety bond under. Both must also be in the amount of 1.5X the vehicle’s value and be held for a period of three years.
There are reasons that an applicant may want to reconsider using one of these methods. Since money has time value through interest and investments, cash is often better used for other purposes. Generally, ILOCs will require interest payments and reduce the amount of borrowing available for other things. Another reason is a claim against the applicant. With ILOCs and CDs, there is little defense against a claim.
Department of Finance and Administration
Office of Motor Vehicle - Bonded Titles
P.O. Box 1272
Little Rock, AR 72203
Once an approval letter is received:
Application must be made within 30 days of the date of the bond. Applicants must also bring other titling documents such as valid insurance, photo identification and paid personal property tax receipts.
Arkansas Certificates of Title are required when the state cannot properly verify the ownership or lien free status of a vehicle. The process allows the state to issue a title while protecting sellers, buyers and other interested parties in the vehicles. Fortunately, these title bonds are easy to obtain and can be purchased online in most cases. Those needing bonded titles can also contact the experts at Axcess Surety anytime for assistance. Anyone can learn more about surety bonds, including frequently asked questions by visiting our Complete Guide.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
