{"data":{"id":"us-ky/krs-186.045","jurisdiction":"us-ky","citation":"KRS 186.045","heading":"Discharge by payment in full -- Duties of secured party when security","body":"interest is discharged -- Filing -- Time -- Fees -- Notations showing security\ninterest -- Clerk not liable for accepting fraudulent termination statement.\n(1) A perfected security interest in a motor vehicle or manufactured home that has been\nsatisfied by payment in full shall be deemed to have been discharged if one (1) or\nboth of the following events has occurred:\n(a) The funds to pay in full and discharge the security interest have been provided\nto the secured party in the form of a cashier's check, certified check, or wire\ntransfer; or\n(b) The debt has been paid to a secured party who is no longer in existence or has\nfailed to file the necessary documents to discharge the lien.\n(2) If payment in full has been made under subsection (1)(a) of this section, the\ndischarge of the lien shall be made not later than ten (10) days from the receipt of\nthe payment.\n(3) When a security interest has been paid in full a nd a termination statement, as\ndefined in KRS 186A.005, or discharge has not been filed, the debtor may petition\nthe Circuit Court in the county of the debtor's residence to order the discharge of the\nsecurity interest. The debtor shall present written evi dence to the Circuit Court that\nthe security interest has been paid in full. If the evidence presented to the Circuit\nCourt proves to the court's satisfaction that the security interest has been paid in\nfull, the court shall order the county clerk to note the termination on the title and to\nremove the lien from the Automated Vehicle Information System (AVIS). A copy\nof the court's order shall immediately be sent to the county clerk in the county\nwhere the security interest was originally filed and the count y clerk shall discharge\nthe security interest and remove the lien information from AVIS in accordance with\nthe provisions of this section.\n(4) Whenever a security interest has been discharged, other than by proceedings under\nPart 6 of Article 9 of KRS Chap ter 355 or similar proceedings, the secured party\nshall:\n(a) 1. For a security interest perfected prior to January 1, 2025:\na. Deliver an authenticated termination statement in the manner\nrequired by KRS 355.9 -513 to the county clerk of the county in\nwhich the title lien statement was submitted; or\nb. Have a county clerk from another county submit by fax or other\nform of electronic communication available and acceptable to both\nsender and recipient, and verified verbally or by electronically\nassigned identification as being from the sending clerk, and w hich\nis able to be copied to an electronic or paper file, on that county\nclerk's letterhead, an authenticated termination statement in the\nmanner required by KRS 355.9 -513 to the county clerk of the\ncounty in which the title lien statement was submitted. T he county\nclerk, upon receipt of the authenticated termination statement in\nthe manner prescribed under this paragraph, shall verify the\nlegitimacy of the document; or\n2. For a security interest perfected on or after January 1, 2025, submit an\nauthenticated termination statement to a county clerk in the same\nmanner as a title lien statement under KRS 186A.195; and\n(b) Deliver a copy of the termination statement to the debtor or the debtor's\ntransferee.\nFor failure to file the termination statement within t he allowable time, the secured\nparty shall be subject to the penalty provided in KRS 186.990(1). Except as\nprovided in subsection (3) of this section, within five (5) days after the receipt of\nthese documents, the county clerk shall enter the filing into t he system of record.\nThe county clerk shall then file the termination statement in the place from which\nthe title lien statement was removed. Termination statements shall be retained in the\nclerk's files for a period of two (2) years subsequent to the date of filing a statement,\nat which time they may be destroyed. The fee for these services are included in the\nprovisions of KRS 186A.190.\n(5) Upon presentation of an owner's title showing a security interest to the county clerk\nof a county where the terminat ion statement was not delivered, the county clerk\nshall access AVIS to determine whether a record of termination of the security\ninterest has been entered into AVIS by the county clerk where the termination\nstatement was delivered by the secured party as p rovided in KRS 186A.210. If a\nrecord of termination has been entered into AVIS, the county clerk of the county\nwhere the termination statement was not delivered shall note the discharge of the\nsecurity interest on the certificate of title by noting that th e termination statement\nhas been delivered, the county where it was delivered, and placing the seal of the\ncounty clerk thereon and may rely on AVIS to do so. If a record of termination has\nnot been entered into AVIS, the county clerk of the county other t han where the\ntermination statement was delivered shall not make any notation upon the\ncertificate of title that the security interest has been discharged or that a termination\nstatement has been delivered to the county where the title lien statement was\nsubmitted.\n(6) Whenever any secured party repossesses a vehicle or manufactured home titled in\nKentucky, for which a security interest is in existence at the time of repossession,\nand disposes of the vehicle or manufactured home pursuant to the provisions o f\nKRS Chapter 355, the secured party shall present, within fifteen (15) days after the\ndisposition, the vehicle's license plate if the plate has not been retained by the\nprevious owner, an affidavit in a form prescribed by the department, proof of\nnotification of all interested parties pursuant to KRS 186A.190 and 355.9 -611, and\na termination statement or proof that a termination statement has been filed. The\nnew owner shall pay to the county clerk all applicable fees for titling and\ntransferring the vehicle or manufactured home into his or her name. Upon receipt of\nthe documents, the county clerk who issued the lien shall then omit from the new\ntitle application any information relating to the security interest under which the\nvehicle or manufactured home w as repossessed or any security interest subordinate\nthereto. However, any security interest, as shown by the title which is superior to\nthe one under which the vehicle or manufactured home was repossessed, shall be\nshown on the title issued by the clerk un less the prior secured party has discharged\nthe security interest in the clerk's office or proof of termination is submitted, if the\nprior security interest was discharged in another clerk's office.\n(7) Whenever any vehicle or manufactured home brought int o Kentucky is required to\nbe titled and the vehicle or manufactured home is then subject to a security interest\nin another state as shown by the out -of-state documents presented to the clerk, the\ncounty clerk is prohibited from processing the application f or title on the vehicle or\nmanufactured home unless the owner obtains from the secured party a financing\nstatement or title lien statement and presents same to the clerk along with the fees\nrequired in KRS 186A.190. The clerk shall note the out -of-state security interest on\nthe certificate of title. This provision does not apply to vehicles required to be\nregistered in Kentucky under forced registration provisions under KRS 186.145.\n(8) The fees provided for in this section are in addition to any state fee provided for by\nlaw.\n(9) Any person violating any provision of this section or any person refusing to\nsurrender a certificate of title registration and ownership or transfer certificate upon\nrequest of any person entitled thereto, is subject to the penalti es provided in KRS\n186.990(1).\n(10) The county clerk is prohibited from noting any security interest on a certificate of\ntitle on any vehicle or manufactured home subject to the provisions of KRS Chapter\n186A if a certificate of title therefor is presented  to the clerk which has all the\nspaces provided thereon for noting security interests fully exhausted. The owner is\nresponsible for ensuring that a discharge is noted on the certificate of title for each\nsecurity interest and then a duplicate title as provided for in KRS 186A.180 shall be\nobtained from the clerk by the owner of the vehicle or manufactured home.\n(11) Security interests in vehicles or manufactured homes sold to or owned by residents\nof other states shall be perfected in the state of the nonre sident and repossession of\nthe vehicle or manufactured home shall be taken pursuant to the laws of that state,\nunless:\n(a) 1. The vehicle is principally operated in Kentucky; or\n2. The manufactured home is located in Kentucky;\n(b) The vehicle or manufactur ed home is properly titled in Kentucky under KRS\nChapter 186A; and\n(c) The security interest is authorized to be noted on the certificate of title by the\ncounty clerk under KRS Chapter 186A.\n(12) A county clerk who accepts an authenticated termination stat ement and complies\nwith the verification requirements of subsection (4)(a)1.b. of this section shall be\nheld harmless from any liability arising from fraudulent termination statements.\n(13) Any active lien that is recorded in AVIS on July 15, 2026, shall n ot be considered\nto be stripped because of the county status.","path":["KRS Chapter 186"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57806","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:51:36Z","sha256":"1eed44410d537ec68111f5b07323e7fc98775f84e0048134c743d9fd9e7ff2d3","source_id":"us-ky","stale":false,"prev":"us-ky/krs-186.044","next":"us-ky/krs-186.047"},"notice":"GroundRules: Original legal text. Not legal advice."}