Help with the indemnity bond process
July 30, 2011 4:52 AM   Subscribe

Can anyone describe the process of using an indemnity bond to obtain title to a vehicle?

I purchased an older (1988) sports car last Fall after asking for recommendations on here. I have really enjoyed driving the car. Mechanically and aesthetically, it is in very good shape. However, there is some fairly serious rust on the underside, as the car came from Cleveland. I have recently found a solution to this problem however - just down the street from me someone is also selling a 1988 model year of the same vehicle that does not run, but that has a very solid rust-free body from Virginia and North Carolina. The price is very, very good on this car; even running, these cars are cheap. I can eventually swap my running gear and interior into it.

However, the hitch is that the car has been sold for parts a few times and the title was left behind a couple of sales back. We know that it was last titled in Virginia, as it has a city registration sticker for Waynesboro, but I cannot find out who had the title last. The NC DMV cannot legally tell me and when I look up reverse VIN lookups, they are not available for Virginia. The current owner really only remembers an internet id for the person he bought it from, and that person got it from Virginia back in 1996, so they are unlikely to remember who they bought it from.

So, enter the indemnity bond process. I am going to call a local bond company that handles these things, but I was wondering if anyone on here had any tips or descriptions about the bonds. I will be doing this in North Carolina.

I know the DMV value of this car, as I have an identical one. It will be valued at $790. From what I've found online, that means that my bond will only be $100 total, as the bond is usually $15 per $1000 of vehicle value (times 1.5), with a $100 minimum.

Here are my questions :

1) Is that a correct calculation of what my TOTAL cost for using the indemnity bond will be?

2) What are the worst case scenarios for using the indemnity bond process? If the million-to-one chance that the car was actually stolen comes to pass, what would happen to the car and the bond? I've read in a forum that the $100 I pay is held by an insurance company which then makes restitution for the car, but that the car would still be mine. Is that correct?

3) Any other facts I should know before pursuing this path?

posted by Slothrop to Travel & Transportation (3 answers total)
Requirements for Obtaining Title by Filing an Indemnity Bond.

It wouldn't surprise me if the bond company tacks on some fees (though you seem to be under the minimum, so who knows?), and there will definitely be title and registration fees from the DMV.

But the whole point of the bond is to protect you should the car have been stolen at some point. You are being indemnified by the bond company, i.e. they are agreeing to pay any person that might make a claim against you for the car in exchange for you paying them some money. It's called a "bond" instead of an "insurance policy" because it's a once-and-done transaction rather than an ongoing relationship with periodic premium payments, but it amounts to the same thing.
posted by valkyryn at 5:51 AM on July 30, 2011

Can you buy the car via lien sale? That's a simple process (here in California, anyway) and the way I've handled cars like this.
posted by buggzzee23 at 5:58 AM on July 30, 2011

Thank you both for your responses. I don't think I can do a lien sale in North Carolina - I Googled it and looked like in NC it's just for real estate. In any case, valkyryn's answer helped assuage some of my apprehension. I initially spoke to someone from the North Carolina DMV who told me about the indemnity bond, but she was trying to get me off the phone really quickly, so I didn't ask as many questions as I should have. I also didn't realize that the trail would dead end so quickly when looking for the title holder.

If anyone else stumbles in and wants to offer their experience or insight, I will definitely check back.
posted by Slothrop at 3:39 PM on July 30, 2011

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