HB 411 — AN ACT relating to security interests.

UNOFFICIAL COPY 20 RS BRHB 56411/GA AN ACT relating to security interests.

(1) Except as provided in subsection (5)[(4)](6)[(4)] of this section and in KRS 355.9-311(4), the perfectionperfection[ and dischargedischarge] of a security interest in any property for which has been issued a Kentucky certificate of title shall be by notation on the certificate of title.title which shall be deemed to have occurred when the provisions of subsection (3) of this section have been complied with.

NotationDischarge shall be made by the entry of informationa requiredsecurity byinterest subsection (8)[(7)] of this section into the Automated Vehicle Information System, and shall be deemedby tonotation haveon occurredthe uponcertificate theof entry.title.

Notation shall be made by the entry of information required by subsection (9)[(7)] of this section into the Automated Vehicle Information System[, and shall be deemed to have occurred upon the entry].

(2) ExceptA asmotor providedvehicle indealer, subsectiona (5)[(4)]secured ofparty thisor section,its therepresentative, notationan assignee of securitya interestsretail relatinginstallment tocontract propertylender, requiredor toa becounty titledclerk inshall Kentuckyrely throughon thea county clerkof shallresidence bedesignated doneby in the officedebtor ofon theany countyapproved, clerknotarized ofstate theform countyutilized in whichlien titling or the debtortitle resides.transfer process signed by the debtor.

AReliance motoron vehiclethe dealer,foregoing anby initialthe securedmotor party,vehicle itsdealer, assigneesecured lender,parties, and a county clerk shall relyrelieve onthose apersons countyfrom ofliability residenceto designatedany bythird theparty debtorclaiming onfailure anyto approved,comply notarizedPage state1 formof utilized10 inHB041110.100 lien- titling56 or- theXXXX titleGA transferUNOFFICIAL processCOPY signed20 byRS theHB debtor.411/GA with this section.

Reliance(3) onExcept theas foregoingprovided byin subsection (6)[(4)] of this section, the motornotation vehicleof dealer,security securedinterests parties,relating andto property required to be titled under this chapter in Kentucky through the county clerk shall relievebe thosedone personsin fromthe liabilityoffice toof anythe thirdcounty partyclerk claimingof failurethe tocounty complyin withwhich the debtor resides as determined by subsections (2) and (4) of this section.

The Pagesecurity 1interest shall be deemed to be noted on the certificate of 10title XXXXand Jacketedperfected, UNOFFICIALor COPYdeemed 20perfected RSat BRthe 56time the security interest shallattaches beas deemedprovided toin beKRS perfected355.9-203, if in compliance with KRS 186A.195(5), when it:a title lien statement:

(a) Is received by the county clerk;clerk in the county in which residence of the debtor resides as determined under the provisions of this section together with the required fees, as designated by the debtor in the sworn statement;

(b) IdentifiesDescribes the securedtitled partyvehicle, withor reasonablevehicle particularity;to be titled, by year, model, make, and vehicle identification number;

(c) IsProvides evidencedthe byname of the datesecured andparty, time-stampedor entrya inrepresentative aof titlethe processingsecured systemparty, maintainedtogether with the additional information about the secured party required by thatsubsection county(9) clerk;of this section with reasonable particularity;

and (d) IsIncludes recordedthe indate and time-stamped entry of the countynotation of residencethe security interest by the county clerk of the debtorrequired asinformation designatedin the Automated Vehicle Information System (AVIS), or its successor title processing system maintained by the debtorDivision inof Motor Vehicle Licensing of the swornTransportation statement.Cabinet.

(3)(4) Except as provided in subsection (5)(6) of this section, if the debtor is other than a natural person, the following provisions govern the determination of the county of the debtor's residence:

If the debtor does not have a place of Page 2 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA business in this state, then the debtor shall be deemed a nonresident for purposes of filing in this state;

(d) A corporation organized under KRS Chapter 271B, 273, or 274 or a limited liability company organized under KRS Chapter 275 shall be deemed a Page 2 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 resident of the county in which its registered office is located, as set forth in its most recent corporate filing with the Secretary of State which officially designates its current registered office;

(f) A cooperative corporation or association organized under KRS Chapter 272 shall be deemed a resident of the county in which its principal business is Page 3 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA transacted, as set forth in its articles of incorporation or most recent amendment thereto filed with the Secretary of State of the Commonwealth of Kentucky;

Page 3 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 and (j) Any other organization (defined in KRS 355.1-201) shall be deemed a resident of the county in which its principal place of business in this state is located, except that any limited liability company, limited liability partnership, limited partnership, or corporation not organized under the laws of this state and not authorized to transact or do business in this state shall be deemed a nonresident for purposes of filing in this state.

Notwithstanding the existence of any filed Page 4 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA financing statement under the provisions of KRS Chapter 355 relating to any property registered or titled in Kentucky, the sole means of perfecting and discharging a security interest in property for which a certificate of title is required by this chapter is by notation on the property's certificate of title under the provisions of this chapter or in accordance with the provisions of KRS 186.045(3).

(4)[(3)](5)[(3)] Except as provided in subsection (5)[(4)](6)[(4)] of this section, before ownership of property subject to a lien evidenced by notation on the certificate of title may be transferred, the transferor shall obtain the release of the prior liens in his name against the property being transferred.

If this requirement is met, information relating to any security interest shown on the title as having been Page 4 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 discharged may be omitted from the title to be issued by the clerk.

(5)[(4)](6)[(4)] Notwithstanding subsections (1),(1) (2),to (3)(5)[, (2), and (4)[(3)](3) of]of this section, a county clerk shall, following inspection of the vehicle by the sheriff, to determine that the vehicle has not been stolen, issue a new ownership document to a vehicle, clear of all prior liens, to a person after he or she provides to the county clerk an affidavit devised by the Transportation Cabinet and completed by the person.

The ownership document presented as a result of this affidavit shall be in accordance with subsection (6)[(5)](7)[(5)] of this section.

Page 5 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA (b) Before he or she provided the notices required by paragraphs (c) and (d) of this subsection:

The vehicle was voluntarily towed or transported pursuant to a request of the current owner or an insurance company that a motor vehicle dealer, licensed as a used motor vehicle dealer and motor Page 5 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 vehicle auction dealer, take possession of and store the motor vehicle in the regular course of business;

(c) More than thirty (30) days before presenting the affidavit to the county clerk, the affiant attempted to notify the owner of the vehicle and all known lienholders, including those noted on the title, by certified mail, return receipt requested, or by a nationally recognized courier service, of his or her name, address, and telephone number as well as his or her intention to obtain a new Page 6 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA title or salvage title, as applicable, clear of all prior liens, unless the owner or a lienholder objects in writing;

and (e) Neither the owner nor a lienholder has objected in writing to the affiant's right Page 6 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 to obtain title to the vehicle.

(6)[(5)](7)[(5)] (a) If subsection (5)[(4)](b)1.(6)[(4)](b)1.

(b) If subsection (5)[(4)](b)2.(6)[(4)](b)2.

(c) If subsection (5)[(4)](b)2.(6)[(4)](b)2.

(7)[(6)](8)[(6)] No more than two (2) active security interests may be noted upon a certificate of title.

(8)[(7)](9)[(7)] In noting a security interest upon a certificate of title, the county clerk shall Page 7 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA ensure that the certificate of title bears the lienholder's name, mailing address and zip code, the date the lien was noted, the notation number, and the county in which the security interest was noted.

(9)[(8)](10)[(8)] For all the costs incurred in the notation and discharge of a security interest on the certificate of title, the county clerk shall receive the fee prescribed by KRS 64.012.

(10)[(9)](11)[(9)] A copy of the application, certified by the county clerk, indicating the lien will be noted on the certificate of title shall be forwarded to the lienholder.

Upon submission of the title lien statement, the county clerk shall use the information contained therein to note the security interest Page 7 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 on the certificate of title, in accordance with KRS 186A.190(8)[(7)].186A.190(9)[(7)].

(2) If a title lien statement and the required fees accompany the application for first title of any property in the name of an owner, the county clerk shall enter the information required by KRS 186A.190(8)[(7)]186A.190(9)[(7)] into the automated system so as to produce a certificate of title in Frankfort bearing in addition to any other required information, the information designated by KRS 186A.190(8)[(7)].186A.190(9)[(7)].

Page 8 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA (3) If a title lien statement and the required fees are not received at the time of application for first title of any property in the name of the owner due to owner's residency in another county, or if the form prescribed by KRS 186A.060 indicates a pending lien but the title lien statement does not accompany the application for title, the county clerk shall enter into the Automated Vehicle Information System (AVIS) the name and address of the lienholder and the county where the lien is to be noted or that a lien is pending.

(4) Should a certificate of title be issued after the thirty (30) day period has expired without the notation of a security interest thereon, or should there be no provision Page 8 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 made for a lien to be noted in the county of residence of the debtor within thirty (30) days and the title issued within that time, the secured party shall request from the debtor, and the debtor shall submit to the secured party, the certificate of title.

The county clerk shall then enter the information required by KRS 186A.190(8)[(7)]186A.190(9)[(7)] into the Automated Vehicle Information System (AVIS) and note on the certificate of title in the appropriate section the information described in that section.

(5) The security interest noted on the certificate of title shall be deemed perfected at the time the security interest attaches (KRS 355.9-203) if the secured party tenders the Page 9 of 10 HB041110.100 - 56 - XXXX GA UNOFFICIAL COPY 20 RS HB 411/GA required fees and submits a properly completed title lien statement and application for first title or, in the case of property previously titled in the name of its debtor, the certificate of title to the appropriate county clerk within thirty (30) days of attachment.

(2) For failure to present both the title and title lien statement within the time prescribed by subsection (1) of this section, the secured party shall pay a penalty of Page 9 of 10 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 56 two dollars ($2) to the county clerk as a prerequisite for noting the security interest on the title.