COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 541
(By Senators Wooton and Rowe)
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[Originating in the Committee on the Judiciary;
reported February 19, 2002.]
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A BILL to amend and reenact sections three and four, article
four-a, chapter seventeen-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, all relating to
certificate to show liens and encumbrances; providing that
liens and encumbrances placed on vehicles are void against
lien creditors under particular circumstances; requiring a
purchase money lien or encumbrance to be perfected on the date
and time of delivery of same to the division; specifying the
documents that will perfect a lien or encumbrnace; requiring
that an application for a certificate of title must be filed
under certain time limitations in order to maintain perfected
status; providing when an application is not filed within a
certain time limitation that the division take action to void
the perfected status of a lien or encumbrance; providing that
no certificate of title will be delivered absent an
application delivered to the division; and defining a "purchase money lien or encumbrance".
Be it enacted by the Legislature of West Virginia:
That sections three and four, article four-a, chapter
seventeen-a of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted, all to read as
follows:
ARTICLE 4A. LIENS AND ENCUMBRANCES ON VEHICLES TO BE SHOWN ON
CERTIFICATE OF TITLE; NOTICE TO CREDITORS AND PURCHASERS.
§17A-4A-3. Notice of lien; noninventory lien created by voluntary
act of the owner not shown on certificate of title or
otherwise perfected void as to subsequent purchasers and lien
creditors; exceptions.
(a) A certificate of title, when issued by the
department
division showing a lien or encumbrance, shall be
deemed considered
from and after the filing with the
department division of the
application therefor
or the notice of lien authorized in section
four of this article adequate notice to the state and its agencies,
boards and commissions, to the United States government and its
agencies, boards and commissions, to creditors and to purchasers
that a lien against the vehicle exists.
and the recording of such
reservation of title, lien or encumbrance in the county wherein the
purchaser or debtor resides or elsewhere is not necessary and shall
not be required or have any effect. Notwithstanding any other
provision of this code to the contrary, and subject to the
provisions of subsection (b) of this section and of section four of this article, any lien or encumbrance placed upon a vehicle by the
voluntary act of the owner but not shown on such certificate of
title shall be void as to any purchaser for value or lien creditor,
who, in either case, without notice of such lien or encumbrance,
purchases such vehicle or acquires by attachment, levy or otherwise
a lien thereupon
(b) Notwithstanding any other provision of this code to the
contrary, and subject to the provisions of subsection (c) of this
section, any lien or encumbrance placed on a vehicle by the
voluntary act of the owner shall be void as against: (i) Any lien
creditor who, without knowledge of the lien, acquires by
attachment, levy or otherwise a lien thereupon, unless the lien or
encumbrance is noted on the certificate of title, a filed
application for certificate of title or the notice of lien
authorized in section four of this article; and (ii) any purchaser
who, without knowledge of the lien or encumbrance, purchases the
vehicle, unless the lien or encumbrance is noted on the certificate
of title, a filed application for certificate of title or the
notice of lien authorized in section four of this article:
Provided, That a purchaser under this subsection who purchases the
vehicle without knowledge of the lien or encumbrance and
contemporaneously obtains actual physical possession of the vehicle
and the certificate of title for the vehicle without the lien or
encumbrance noted on the certificate of title, receives the vehicle
free and clear of the lien or encumbrance.
(b) (c) The creation and perfection of a lien against: (1) A vehicle held as inventory for sale by a registered dealer holding
title by assignment; or (2) a vehicle for which a certificate of
title has been issued and is held as inventory for lease by a
vehicle rental agency or similar person engaged solely in the
business of leasing vehicles in accordance with the provisions of
article nine, chapter forty-six of this code shall be deemed
adequate notice to the state and its agencies, boards and
commissions, to the United States government and its agencies,
boards and commissions, to creditors and to purchasers that a lien
against the vehicle exists, subject to the provisions of section
three hundred seven, article nine, chapter forty-six of this code,
except that any lien or encumbrance on such a vehicle shall not be
effective against the rights of any purchaser for value who
purchases
such the vehicle primarily for personal, family,
household or agricultural purposes unless such lien or encumbrance
is recorded on the certificate of title or specified on the bill of
sale.
§17A-4A-4. Purchase money lien or encumbrance; effective date of
lien; dealer to record lien; fees.
(a) A
deferred purchase money lien or encumbrance upon any
motor vehicle
may shall be perfected
by recording in either
electronic or paper format the name and address of the lienholder
upon the face of the certificate of title for the motor vehicle.
If an application for a certificate of title is filed with the
division of motor vehicles within sixty days after the date of
purchase of the motor vehicle, the effective date of the lien or encumbrance shall be the date the lien or encumbrance was created.
If an application for a certificate of title is not filed within
the sixty-day period, the lien shall be perfected from the date it
was filed with the division of motor vehicles on the date and at
time of delivery to the division of motor vehicles of either the
application for a certificate of title with all supporting
documents, or a completed notice of lien form in a format
determined by the division. The notice of lien form may be
submitted to the division in paper format, facsimile or in any
other electronic format approved by the division.
(b) If perfection occurs through the notice of lien form
pursuant to subsection (a) of this section, an application for
certificate of title must be received by the division of motor
vehicles within sixty days after the date of purchase of the
vehicle or refinancing of such purchase in order to maintain the
perfected status of such lien or encumbrance. When an application
is not filed within the time prescribed, the lien or encumbrance
shall become unperfected on the sixty-first day following the
purchase or refinancing date of the vehicle. If an application for
a certificate of title is received by the division on or after the
sixty-first day, the new perfection date for the lien or
encumbrance is the date the application for a certificate of title
is received by the division. Nothing in this section extends the
sixty-day title application filing requirement of section four,
article four of this chapter. The name and address of the lien
holder shall be recorded on this title by the division in either electronic or paper format.
(c) No certificate of title for a vehicle shall be issued
unless an application is delivered to the division of motor
vehicles.
(b) (d) In all transactions involving a
deferred purchase
money lien or encumbrance upon a motor vehicle, the motor vehicle
dealer shall collect and remit to the division of motor vehicles
the title, tax and registration fees required under section four,
article three of this chapter and file and record with the division
of motor vehicles any lien created as a result of the transaction:
Provided, That a motor vehicle dealer may remit the title, tax and
registration fees through any license service that is licensed by
the division of motor vehicles.
(c) (e) No fee may be charged by a motor vehicle dealer for
its services required under this section except that fee authorized
by section one-b, article six of this chapter or subdivision (6),
subsection (a), section one hundred nine, article three, chapter
forty-six-a of this code.
(f) For purposes of this section, a purchase money lien or
encumbrance is defined to include: (1) A lien taken or retained by
the seller or the vehicle to secure all or a part of its price; (2)
a lien taken by a person who by making advances or incurring an
obligation gives value to enable another to acquire rights in or
the use of a vehicle if such value is so used; and (3) the
refinancing of either of the foregoing for the sole purpose of
repaying a loan secured by the vehicle.
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(NOTE: The purpose of this bill is to address various legal
aspects relative to a certificate to show liens and encumbrances
applicable to vehicles. Particularly the bill contains the
following changes to current law: (1) It provides that liens and
encumbrances placed on vehicles are void against lien creditors
under particular circumstances; (2) it requires a purchase money
lien or encumbrance to be perfected on the date and time of
delivery of same to the division; (3) it specifies certain
documents that will perfect a lien or encumbrance on a vehicle; (4)
it requires that an application for a certificate of title must be
filed under certain time limitations in order to maintain perfected
status; (5) it provides that when an application is not filed
within a certain time limitation that the division shall take
action to void the perfected status of a lien or encumbrance; (6)
it provides that no certificate of title will be delivered absent
an application for same delivered to the division; and, (7) it
defines the terms "purchase money lien or encumbrance".
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.)
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