(1) If the interest of an owner in a vehicle, manufactured home or mobile home passes to another other than by voluntary transfer the transferee shall, except as provided in subsection (2), promptly deliver to a county tax collector or a designated agent the last certificate of title, if available, proof of the transfer, and make application for a new certificate in the form the State Tax Commission prescribes.

(2) If the interest of the owner is terminated or the vehicle, manufactured home or mobile home is sold under a security agreement by a lienholder named in the certificate of title, the transferee shall promptly make application to a county tax collector or a designated agent for a new certificate in the form the commission prescribes. The application shall be accompanied by the last certificate of title and an affidavit made by or on behalf of the lienholder that the vehicle, manufactured home or mobile home was repossessed and that the interest of the owner was lawfully terminated or sold pursuant to the terms of the security agreement.

If the lienholder succeeds to the interest of the owner and holds the vehicle, manufactured home or mobile home for resale, he need not secure a new certificate of title but, upon transfer to another person, shall promptly mail or deliver to the transferee the certificate, affidavit and other documents required to be sent to the commission by the transferee. The transferee shall promptly make application to a county tax collector or a designated agent for a new certificate in the form prescribed by the commission.

(3) Notwithstanding anything to the contrary contained in this section, a person holding a certificate of title whose interest in the vehicle, manufactured home or mobile home has been extinguished or transferred other than by voluntary transfer shall mail or deliver the certificate to the commission upon request of the commission. The delivery of the certificate pursuant to the request of the commission does not affect the rights of the person surrendering the certificate. The action of the commission in issuing a new certificate of title as provided herein is not conclusive upon the rights of an owner or lienholder named in the old certificate.