KRS 186.045: Discharge by payment in full -- Duties of secured party when security

interest is discharged -- Filing -- Time -- Fees -- Notations showing security

interest -- Clerk not liable for accepting fraudulent termination statement.

(1) A perfected security interest in a motor vehicle or manufactured home that has been

satisfied by payment in full shall be deemed to have been discharged if one (1) or

both of the following events has occurred:

(a) The funds to pay in full and discharge the security interest have been provided

to the secured party in the form of a cashier's check, certified check, or wire

transfer; or

(b) The debt has been paid to a secured party who is no longer in existence or has

failed to file the necessary documents to discharge the lien.

(2) If payment in full has been made under subsection (1)(a) of this section, the

discharge of the lien shall be made not later than ten (10) days from the receipt of

the payment.

(3) When a security interest has been paid in full a nd a termination statement, as

defined in KRS 186A.005, or discharge has not been filed, the debtor may petition

the Circuit Court in the county of the debtor's residence to order the discharge of the

security interest. The debtor shall present written evi dence to the Circuit Court that

the security interest has been paid in full. If the evidence presented to the Circuit

Court proves to the court's satisfaction that the security interest has been paid in

full, the court shall order the county clerk to note the termination on the title and to

remove the lien from the Automated Vehicle Information System (AVIS). A copy

of the court's order shall immediately be sent to the county clerk in the county

where the security interest was originally filed and the count y clerk shall discharge

the security interest and remove the lien information from AVIS in accordance with

the provisions of this section.

(4) Whenever a security interest has been discharged, other than by proceedings under

Part 6 of Article 9 of KRS Chap ter 355 or similar proceedings, the secured party

shall:

(a) 1. For a security interest perfected prior to January 1, 2025:

a. Deliver an authenticated termination statement in the manner

required by KRS 355.9 -513 to the county clerk of the county in

which the title lien statement was submitted; or

b. Have a county clerk from another county submit by fax or other

form of electronic communication available and acceptable to both

sender and recipient, and verified verbally or by electronically

assigned identification as being from the sending clerk, and w hich

is able to be copied to an electronic or paper file, on that county

clerk's letterhead, an authenticated termination statement in the

manner required by KRS 355.9 -513 to the county clerk of the

county in which the title lien statement was submitted. T he county

clerk, upon receipt of the authenticated termination statement in

the manner prescribed under this paragraph, shall verify the

legitimacy of the document; or

2. For a security interest perfected on or after January 1, 2025, submit an

authenticated termination statement to a county clerk in the same

manner as a title lien statement under KRS 186A.195; and

(b) Deliver a copy of the termination statement to the debtor or the debtor's

transferee.

For failure to file the termination statement within t he allowable time, the secured

party shall be subject to the penalty provided in KRS 186.990(1). Except as

provided in subsection (3) of this section, within five (5) days after the receipt of

these documents, the county clerk shall enter the filing into t he system of record.

The county clerk shall then file the termination statement in the place from which

the title lien statement was removed. Termination statements shall be retained in the

clerk's files for a period of two (2) years subsequent to the date of filing a statement,

at which time they may be destroyed. The fee for these services are included in the

provisions of KRS 186A.190.

(5) Upon presentation of an owner's title showing a security interest to the county clerk

of a county where the terminat ion statement was not delivered, the county clerk

shall access AVIS to determine whether a record of termination of the security

interest has been entered into AVIS by the county clerk where the termination

statement was delivered by the secured party as p rovided in KRS 186A.210. If a

record of termination has been entered into AVIS, the county clerk of the county

where the termination statement was not delivered shall note the discharge of the

security interest on the certificate of title by noting that th e termination statement

has been delivered, the county where it was delivered, and placing the seal of the

county clerk thereon and may rely on AVIS to do so. If a record of termination has

not been entered into AVIS, the county clerk of the county other t han where the

termination statement was delivered shall not make any notation upon the

certificate of title that the security interest has been discharged or that a termination

statement has been delivered to the county where the title lien statement was

submitted.

(6) Whenever any secured party repossesses a vehicle or manufactured home titled in

Kentucky, for which a security interest is in existence at the time of repossession,

and disposes of the vehicle or manufactured home pursuant to the provisions o f

KRS Chapter 355, the secured party shall present, within fifteen (15) days after the

disposition, the vehicle's license plate if the plate has not been retained by the

previous owner, an affidavit in a form prescribed by the department, proof of

notification of all interested parties pursuant to KRS 186A.190 and 355.9 -611, and

a termination statement or proof that a termination statement has been filed. The

new owner shall pay to the county clerk all applicable fees for titling and

transferring the vehicle or manufactured home into his or her name. Upon receipt of

the documents, the county clerk who issued the lien shall then omit from the new

title application any information relating to the security interest under which the

vehicle or manufactured home w as repossessed or any security interest subordinate

thereto. However, any security interest, as shown by the title which is superior to

the one under which the vehicle or manufactured home was repossessed, shall be

shown on the title issued by the clerk un less the prior secured party has discharged

the security interest in the clerk's office or proof of termination is submitted, if the

prior security interest was discharged in another clerk's office.

(7) Whenever any vehicle or manufactured home brought int o Kentucky is required to

be titled and the vehicle or manufactured home is then subject to a security interest

in another state as shown by the out -of-state documents presented to the clerk, the

county clerk is prohibited from processing the application f or title on the vehicle or

manufactured home unless the owner obtains from the secured party a financing

statement or title lien statement and presents same to the clerk along with the fees

required in KRS 186A.190. The clerk shall note the out -of-state security interest on

the certificate of title. This provision does not apply to vehicles required to be

registered in Kentucky under forced registration provisions under KRS 186.145.

(8) The fees provided for in this section are in addition to any state fee provided for by

law.

(9) Any person violating any provision of this section or any person refusing to

surrender a certificate of title registration and ownership or transfer certificate upon

request of any person entitled thereto, is subject to the penalti es provided in KRS

186.990(1).

(10) The county clerk is prohibited from noting any security interest on a certificate of

title on any vehicle or manufactured home subject to the provisions of KRS Chapter

186A if a certificate of title therefor is presented to the clerk which has all the

spaces provided thereon for noting security interests fully exhausted. The owner is

responsible for ensuring that a discharge is noted on the certificate of title for each

security interest and then a duplicate title as provided for in KRS 186A.180 shall be

obtained from the clerk by the owner of the vehicle or manufactured home.

(11) Security interests in vehicles or manufactured homes sold to or owned by residents

of other states shall be perfected in the state of the nonre sident and repossession of

the vehicle or manufactured home shall be taken pursuant to the laws of that state,

unless:

(a) 1. The vehicle is principally operated in Kentucky; or

2. The manufactured home is located in Kentucky;

(b) The vehicle or manufactur ed home is properly titled in Kentucky under KRS

Chapter 186A; and

(c) The security interest is authorized to be noted on the certificate of title by the

county clerk under KRS Chapter 186A.

(12) A county clerk who accepts an authenticated termination stat ement and complies

with the verification requirements of subsection (4)(a)1.b. of this section shall be

held harmless from any liability arising from fraudulent termination statements.

(13) Any active lien that is recorded in AVIS on July 15, 2026, shall n ot be considered

to be stripped because of the county status.