California DMV Bonds and Bonded Titles

What a DMV surety bond does, and who it protects

A DMV bond is a surety bond: a promise from a surety company to the state and the public that the bonded person will meet an obligation. It answers to buyers, sellers, lenders and the state, not to the person who bought it. If the surety pays a claim, it then looks to the bonded owner or business to pay it back, the same way the contractor and surety bonds on a construction license work.

That makes a DMV bond very different from a policy that protects your own business. A crime bond, for example, reimburses the business when an employee steals from it. A vehicle title surety bond or a dealer bond does the opposite: it protects the people who deal with you.

When the DMV requires a bonded title in California

The DMV’s Vehicle Industry Registration Procedures Manual, section 23.020, requires a Motor Vehicle Ownership Surety Bond on form REG 5057, or a bond alternative, when the usual proof of ownership is unavailable and any one of these applies:

the vehicle is worth $5,000 or more
the vessel is worth $2,000 or more
the vehicle is nontransferable, the goldenrod title
a release from the legal owner or lienholder cannot be obtained

The manual cites Vehicle Code sections 4157 and 38050 and California Code of Regulations section 152 for these rules. Two examples: a private buyer of a $7,000 car who never received a signed title, and an owner whose old lienholder can no longer be found to sign a release.

Setting the bond amount at fair market value

The bond equals the vehicle’s or vessel’s fair market value. The DMV states no multiplier, so the one-and-a-half-times rule some other states use does not apply in California.

The DMV sets that value in one of two ways. The first is a written appraisal from a licensed dealer, a motor vehicle insurance representative or a yacht and shipbroker. The second is a REG 256 Statement of Facts based on a recognized valuation guide such as Kelley Blue Book, using the average of the lowest and highest values. A truck the guide lists between $14,000 and $18,000 would carry a $16,000 bond.

Filing the REG 5057 or REG 5058 bond

The surety must sign the bond, and that signature must be notarized. The manual states that a preprinted surety signature and notary acknowledgment is not accepted, so a bond form that arrives with both already printed on it will not be accepted. Our page on insurance for notaries covers the notary’s side of that acknowledgment.

Boats follow a parallel track. Manual section 23.055 calls for an Undocumented Vessel Surety Bond on form REG 5058, or an alternative, when ownership evidence is missing and the vessel is worth $2,000 or more, no lienholder release can be obtained, or a dealer, dismantler or registration service applies, citing Vehicle Code section 9923 and CCR section 190.03.

Cash and other alternatives to a vehicle title surety bond

An owner who would rather not buy a bond can post a bond alternative on form REG 5059, under Code of Civil Procedure sections 995.710 to 995.770. Manual section 23.025 lists four kinds: a cash deposit, bearer bonds or notes, a certificate of deposit payable to the State of California, or an assigned savings or share account. Each must equal at least the bond amount.

The money is tied up for a while. Under manual section 23.035, a bond alternative can be returned once the vehicle or vessel has been off California registration for at least three years and the current California certificate of ownership is surrendered. For a $16,000 truck, that means $16,000 parked with the state, against a surety bond priced in the hundreds.

Dealer and remanufacturer bonds

A California DMV bond is a condition of a dealer license. Vehicle Code section 11710(b) sets the dealer bond at $50,000, or $10,000 for a dealer who deals only in motorcycles or all-terrain vehicles, and the remanufacturer bond at $50,000. The bond answers for fraud or fraudulent representation that causes a monetary loss to a purchaser, seller, financing agency or governmental agency, such as a dealer failing to pay off the lien on a trade-in or to pass along title and fees.

The bond has to stay whole. Under the same section, the license is automatically suspended if the bond is reduced or a final judgment goes unpaid. Standard dealers file form OL 25 under 13 CCR 268.10, remanufacturers file OL 25A, and OL 25B, under 13 CCR 268.12, is the bond form for motorcycle dealers, motorcycle lessor-retailers and wholesale-only dealers selling fewer than 25 vehicles a year.

Registration service and other DMV license bonds

A registration service, the business that handles title and registration paperwork for customers, posts a $25,000 bond on form OL 605 for both the original license and each renewal, under Vehicle Code section 11402. The bond stays in effect for three years after the service stops doing business, so a customer whose fees or documents were mishandled can still make a claim after the doors close.

The DMV forms list carries several more bond forms for narrower licenses: the Traffic Violator School Owner Surety Bond (OL 704 B), the Autonomous Vehicle Manufacturer Surety Bond (OL 317), the Employer Testing Program Surety Bond (DL 524 ETP), the Commercial Requester Account Bond (INF 1132) and the $50,000 Bond Exemption Application (OL 56). Confirm the current form and amount with the DMV.

What DMV bonds cost

Published prices give a starting point, not a Mithril1 quote. For title bonds, SuretyBonds.com, one bond marketplace, publishes a price of $100 for bonds of $100 to $6,000, and $10 per $1,000 of bond, with a $100 minimum, for bonds of $6,001 to $50,000. Bonds over $50,000 start at $500 and need an application. On that schedule, the $16,000 truck above would cost $160.

License bonds are priced on the applicant more than the amount. BOSS Bonds, a bond agency, says dealer bonds run 1% to 3% of the bond amount, based on credit profile, financial background and business experience, which puts a $50,000 dealer bond at $500 to $1,500. Stronger credit gets the lower rates, and the agency says applicants with weaker credit can still be approved at a higher rate. It lists registration service bonds as starting at $250 and commercial requester account bonds as starting at $500.

We request DMV bonds from sureties, and the surety decides after reviewing the application, the vehicle value or license type, and your credit. Tell us which bond the DMV asked for and we will start there.

A few useful answers

Common questions

How much is a bonded title bond in California?

The fair market value of the vehicle or vessel, set by a written appraisal or a REG 256 statement averaging the low and high values in a guide such as Kelley Blue Book. California does not apply a 1.5x multiplier.

When does the DMV make me get a bond to title a car?

When you lack the usual ownership papers and the vehicle is worth $5,000 or more, the title is nontransferable, or you cannot get a release from the legal owner or lienholder. Vessels worth $2,000 or more follow the same idea on form REG 5058.

Can I put up cash instead of a DMV surety bond?

Yes, on form REG 5059, as a cash deposit, certificate of deposit, bearer bonds or an assigned savings account equal to the bond amount. It comes back after the vehicle has been off California registration for at least three years and the title is surrendered.

Does a dealer bond protect my dealership?

No. It protects buyers, sellers, lenders and the state against fraud or misrepresentation, and the dealer must repay the surety for any claim it pays.

Does my credit affect a California DMV bond?

For license bonds, yes. BOSS Bonds says dealer bond rates of 1% to 3% follow credit, finances and experience. Title bonds are priced mainly on the bond amount, as the published schedule above shows.

Can I get a California DMV bond through Mithril1?

You can, when a surety accepts the application after reviewing the vehicle or license details and your credit. We gather those details with you and request the bond the DMV asked for.