(a) If a lien or encumbrance is first created at the time of transfer, the certificate of title must be retained by or delivered to the lienholder. All liens, mortgages, and encumbrances noted upon a certificate of title take priority according to the order of time in which they are noted on it by the department. All such liens, mortgages, and encumbrances must be valid as against the creditors of the owner of a watercraft or outboard motor, whether armed with process or not, and against subsequent purchasers of any such watercraft or outboard motor, or against holders of subsequent liens, mortgages, or encumbrances upon the watercraft or outboard motor.

(b) When a lien is discharged, the holder shall note that fact on the face of the certificate of title. Within thirty days of discharging the lien, the holder shall present it to the department.

(c) A security interest is perfected by the delivery to the department of the existing certificate of title, if any, an application for a certificate of title containing the name and address of the lienholder and the date of the security agreement, and the required fee. It is perfected as of the time of its creation if the delivery is completed within thirty days of its creation, otherwise, as of the time of the delivery.

(d) If the person acquires a watercraft or outboard motor and the title shows an outstanding lien and neither the department nor the transferee can verify the existence of the lien, the transferee may provide proof of an attempt to notify the lienholder of record of the transfer and the attempt to verify the existence of the lien by certified mail and if the lienholder of record does not respond within thirty days of the attempted notice, the lien is unenforceable and the department shall issue a title clear of the lien.

(e) If an owner of a watercraft or outboard motor attempts to verify the existence of a lien and neither the owner nor the department can verify the existence, the owner may provide proof of an attempt to notify the lienholder of record to verify the existence of the lien by certified mail and if the lienholder of record does not respond within thirty days of the attempted notice, the lien is unenforceable and the department shall issue a title clear of the lien.

HISTORY: 1962 Code Section 70-295.114; 1971 (57) 915; 1984 Act No. 341, Section 1; 1985 Act No. 47, Section 2; 1993 Act No. 181, Section 1270; 2008 Act No. 344, Section 15, eff six months after approval (approved June 11, 2008).

Effect of Amendment

The 2008 amendment, in subsection (a), added the first sentence relating to retention of title by the lienholder; rewrote subsection (b); in subsection (c), in the second sentence substituted "thirty days" for "twenty days"; and added subsections (d) and (e) relating to verifying the existence of a lien.