(1) No certificate of title shall be issued by the department until the outstanding evidence of ownership is surrendered to the department. (2) If the department is not satisfied as to the ownership of the vehicle or that there are no undisclosed security interests in it, the department, subject to sub. (3), shall withhold issuance of a certificate of title until the applicant presents documents reasonably sufficient to satisfy the department as to the applicant’s own- ership of the vehicle and that there are no undisclosed security interests in it. (3) Notwithstanding sub. (2), the department may issue a certificate of title if the applicant fulfills either of the following requirements: (a) The applicant is a dealer licensed under ss. 218.0101 to 218.0163 or 218.11 and is financially responsible as substantiated by the last financial statement on file with the licensor, a finance company licensed under ss. 138.09 or 218.0101 to 218.0163, a bank organized under the laws of this state, or a national bank located in this state; or (b) The applicant has filed with the department a bond in the form prescribed by the department and executed by the applicant, and either accompanied by the deposit of cash with the department or executed by a person authorized to conduct a surety business in this state. The bond shall be in an amount equal to one and one-half times the value of the vehicle as determined by the department and conditioned to indemnify any prior owner and secured party 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 fees, by reason of the issuance of the certificate of title for 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 5 years or prior thereto if, apart from this section, a certificate of title could then be issued for the vehicle, or 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 on the bond.
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