CHAPTER 261 CERTIFICATES OF TITLE AND REGISTRATION OF VEHICLES
Certificate of Title
Section 261:10
261:10 Withholding of Certificate; Bond Requirement. –
If the director is not satisfied as to the ownership of the vehicle or that there are no undisclosed security interests in it, the director may register the vehicle but shall either:
I. Withhold issuance of a certificate of title until the applicant presents documents reasonably sufficient to satisfy the director as to the applicant's ownership of the vehicle and that there are no undisclosed security interests in it; or
II. As a condition of issuing a certificate of title, require the applicant to file with the department a bond in the form prescribed by the director and executed by the applicant, and either accompanied by the deposit of cash with the department or also executed by a person authorized to conduct a surety business in this state. The bond shall be in an amount equal to 11/2 times the value of the vehicle as determined by the director and 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, against any expense, loss or damage, including reasonable attorney's fees, by reason of the issuance of the certificate of title of the vehicle or on account of any defect in or undisclosed security interest upon the right, title and interest of the applicant in and to the vehicle. Any such interested person has a right of action to recover on the bond for any breach of its conditions, but the aggregate liability of the surety to all persons shall not exceed the amount of the bond. The bond, and any deposit accompanying it, shall be returned at the end of 3 years or prior thereto if the vehicle is no longer registered in this state and the currently valid certificate of title is surrendered to the department, unless the department has been notified of the pendency of an action to recover the bond.