KRS 186A.190: Security interest notation required on title document -- Notarized

designation of debtor's county of residence provides reliance on and relief

from liability -- Requirements to perfect title on security interest --

Continuation statements -- Determination of debtor's residence when debtor is

other than a natural person -- Discharge of security interest -- Issuance of new

ownership document to creditor in possession upon certain conditions -- Fees --

Electronic transmission of liens.

(1) Except as provided in subsection (6) of this section and in KRS 355.9 -311(4), the

perfection 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 titl e which

shall be deemed to have occurred when the provisions of subsection (3) of this

section have been complied with. Discharge of a security interest shall be by

notation on the certificate of title. Notation shall be made by the entry of

information required by subsection (9) of this section into the Automated Vehicle

Information System. The notation of the security interest on the certificate of title

shall be in accordance with this chapter and shall remain effective from the date on

which the security interest is noted on the certificate of title for a period of ten (10)

years, or, in the case of a manufactured home, for a period of thirty (30) years, or

until discharged under this chapter and KRS Chapter 186. The filing of a

continuation statement wi thin the six (6) months preceding the expiration of the

initial period of a notation's effectiveness extends the expiration date for five (5)

additional years, commencing on the day the notation would have expired in the

absence of the filing. Succeeding c ontinuation statements may be filed in the same

manner to continue the effectiveness of the initial notation.

(2) A motor vehicle dealer, a secured party or its representative, an assignee of a retail

installment contract lender, the cabinet, or a county c lerk shall rely on a county of

residence designated by the debtor on any approved, notarized state form utilized in

lien titling or the title transfer process signed by the debtor. Reliance on the

foregoing by the motor vehicle dealer, secured parties, cab inet, and county clerk

shall relieve those persons from liability to any third party claiming failure to

comply with this section.

(3) Except as provided in subsection (6) of this section, the notation of security

interests relating to property required to be titled under this chapter in Kentucky

through the cabinet shall be done in the office of a county clerk. The notation of a

security interest shall reflect the county in which the debtor resides as determined

by subsections (2) and (4) of this section. The security interest shall be deemed to

be noted on the certificate of title and perfected, or deemed perfected at the time the

security interest attaches as provided in KRS 355.9 -203, if in compliance with KRS

186A.195(8), when a title lien statement:

(a) Is received by the county clerk, together with the required fees;

(b) Describes the titled vehicle, or vehicle to be titled, by year, model, make, and

vehicle identification number;

(c) Provides the name of the secured party, or a representative of the s ecured

party, together with the additional information about the secured party

required by subsection (9) of this section with reasonable particularity; and

(d) Includes the date and time -stamped entry of the notation of the security

interest by the county clerk of the required information in the Automated

Vehicle Information System (AVIS), or its successor title processing system

maintained by the Division of Motor Vehicle Licensing of the Transportation

Cabinet.

(4) Except as provided in subsection (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:

(a) A partnership shall be deemed a resident of the county in which its principal

place of business in this state is located. If the debtor does not have a place of

business in this state, then the debtor shall be deemed a nonresident for

purposes of filing in this state;

(b) A limited partnership organized under KRS Chapter 362 or as defined in KRS

362.2-102(14) shall be deemed a resident of the county in which its principal

place of business is located, as set forth in its certificate of limited partnership

or most recent amendment thereto filed pursuant to KRS Chapter 362 or

362.2-202. If the office is not located in this state, the debtor shall be deemed

a nonresident for purposes of filing in this state;

(c) A limited partnership not organized under the laws of this state and authorized

to do business in this state shall be deemed a resident of the county in which

the office of its process agent is located, as set forth in the designation or most

recent amendm ent thereto filed with the Secretary of State of the

Commonwealth of Kentucky;

(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

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;

(e) A corporation not organized under the laws of this state, but authorized to

transact or do business in this state under KRS Chapter 271B, 273, or 274, or

a limited liability company not organized under the laws of this state, but

authorized to transact business in this state under KRS Chapter 275, shall be

deemed a resident of the county in which its registered office is located, as set

forth in its most recent 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

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;

(g) A cooperative corporation organized under KRS Chapter 279 shall be deemed

a resident of the county in which its principal office is located, as set forth in

its articles of incorporation or most recent amendment thereto filed with the

Secretary of State of the Commonwealth of Kentucky;

(h) A business trust organized under KRS Chapter 386 shall be deemed a resident

of the county in which its principal place of business is located, as evidenced

by the recordation of its declaration of trust in that county pursuant to KRS

Chapter 386;

(i) A credit union organized under Subtitle 6 of KRS Chapter 286 shall be

deemed a resident of the county in which its principal place of business is

located, as set forth in its articles of incorporation or most recent amendment

thereto filed with the Sec retary of State of the Commonwealth of Kentucky;

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. If the organizatio n does not

have a place of business in this state, then it shall be deemed a nonresident for

purposes of filing in this state.

If the debtor does not reside in the Commonwealth, the notation of the security

interest shall be done in the office of the coun ty clerk in which the property is

principally situated or operated. Notwithstanding the existence of any filed

financing statement under the provisions of KRS Chapter 355 relating to any

property registered or titled in Kentucky, the sole means of perfecti ng 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 ).

In other respects the security interest is governed by the provisions of KRS Chapter

355.

(5) Except as provided in subsection (6) of this section, before ownership of property

subject to a lien evidenced by notation on the certificate of title may be t ransferred,

the transferor shall obtain the release of the prior liens in his or her name against the

property being transferred. Once a security interest has been noted on the owner's

title, a subsequent title shall not be issued by any county clerk free of the notation

unless it has been noted in the system of record established under KRS 186A.195

that the security interest has been discharged. If this requirement is met, information

relating to any security interest shown on the title as having been discharged may be

omitted from the title to be issued by the clerk. If information relating to the

discharge of a security interest is presented to a clerk under the provisions of KRS

186.045(3), the clerk shall discharge the security interest and remove the l ien

information from AVIS.

(6) Notwithstanding subsections (1) to (5) 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 s ubsection (7) of

this section. In the affidavit, the affiant shall attest that:

(a) The affiant or the agent of the affiant possesses the vehicle;

(b) Before he or she provided the notices required by paragraphs (c) and (d) of

this subsection:

1. A debt on the vehicle has been owed him or her for more than thirty (30)

days;

2. Within thirty (30) days of payment of damages by an insurance

company and receipt by the current owner of the motor vehicle or

lienholder of damages pursuant to a claim settlement whi ch required

transfer of the vehicle to the insurance company, the insurance company

has been unable to obtain:

a. A properly endorsed certificate of title on the vehicle from the

current owner; and

b. If applicable, any lien satisfactions; or

3. a. The veh icle 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

vehicle auction dealer, take possession of and store the motor

vehicle in the regular course of business; and

b. Within forty -five (45) days of taking possession of the motor

vehicle, the motor vehicle dealer has not been paid storage fees by

the current owner or lienholder and has not been provided both a

properly endorse d certificate of title and if applicable, any lien

satisfactions;

(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

title or salvage title, as applicable, clear of all prior liens, unless the owner or

a lienholder objects in writing;

(d) More than fourteen (14) days before presenting the affidavit to the county

clerk, the affiant had published a legal notice stating his or her intention to

obtain title to the vehicle. Th e legal notice appeared at least twice in a seven

(7) day period in a newspaper with circulation in the county. The legal notice

stated:

1. The affiant's name, address, and telephone number;

2. The owner's name;

3. The names of all known lienholders, including those noted on the title;

4. The vehicle's make, model, and year; and

5. The affiant's intention to obtain title to the vehicle unless the owner or a

lienholder objects in writing within fourteen (14) days after the last

publication of the legal notice; and

(e) Neither the owner nor a lienholder has objected in writing to the aff iant's right

to obtain title to the vehicle.

(7) (a) If subsection (6)(b)1. of this section applies, the new ownership document

shall be a title.

(b) If subsection (6)(b)2. or 3. of this section applies, the new ownership

document shall be a salvage title if the vehicle meets the requirements for a

salvage title as stated in KRS 186A.520.

(c) If subsection (6)(b)2. or 3. of this section applies and the vehicle does not

meet the requirements for a salvage title as stated in KRS 186A.520, the new

ownership document shall be a title.

(8) No more than two (2) active security interests may be noted upon a certificate of

title.

(9) In noting a security interest upon a certificate of title, the county clerk shall 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. The clerk shall obtain the information required by this

subsection for notation upon the certificate of t itle from the title lien statement

described in KRS 186A.195.

(10) 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.

The fee prescri bed by this subsection shall be paid at the time of submittal of the

title lien statement described in KRS 186A.195.

(11) 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.

(12) (a) Any lien or security interest filed under this chapter may be electronically

transmitted to the cabinet through the electronic title application and

registration system.

(b) Notwithstanding the provisions of this section an d KRS 186A.015 and

186A.074 that require a lien to be noted on the face of the title, if there are

one (1) or more liens on a motor vehicle, the cabinet may electronically notify

the first lienholder of any additional liens.

(c) Subsequent lien satisfactio ns may be electronically transmitted to the cabinet

and shall include the name and address of the person satisfying the lien.

(d) When liens and lien satisfactions are electronically transmitted, a clean

certificate of title shall not be issued until the last lien is satisfied.

(e) A duly certified copy of the cabinet's electronic record of the lien shall be

admissible in any civil, criminal, or administrative proceedings in this state as

evidence of the existence of the lien.

(13) If a security interest ex pires without being renewed, the cabinet shall remove the

lien from the certificate of title in the AVIS system.