A. Except as otherwise provided in this section or § 29.1-733.29, a security interest in a watercraft shall be perfected only by delivery to the Department of an application for a certificate of title that identifies the secured party and otherwise complies with § 29.1-733.7. The security interest is perfected on the later of delivery to the Department of the application and the applicable fee or attachment of the security interest under § 8.9A-203.

B. If the interest of a person named as owner, lessor, consignor, or bailor in an application for a certificate of title delivered to the Department is a security interest, the application sufficiently identifies the person as a secured party. Identification on the application for a certificate of a person as owner, lessor, consignor, or bailor is not by itself a factor in determining whether the person's interest is a security interest.

C. If the Department has created a certificate of title for a watercraft, a security interest in the watercraft shall be perfected by delivery to the Department of an application, on a form the Department shall require, to have the security interest added to the certificate. The application shall be signed by an owner of the watercraft or by the secured party and shall include:

1. The name of the owner of record;

2. The name and mailing address of the secured party;

3. The hull identification number for the watercraft; and

4. If the Department has created a written certificate of title for the watercraft, the certificate.

D. A security interest perfected under subsection C is perfected on the later of delivery to the Department of the application and all applicable fees or attachment of the security interest under § 8.9A-203.

E. On delivery of an application that complies with subsection C and payment of all applicable fees, the Department shall create a new certificate of title pursuant to § 29.1-733.8 and deliver the new certificate or a record evidencing an electronic certificate pursuant to subsection A of § 29.1-733.12. The Department shall maintain in the files of the Department the date and time of delivery of the application to the Department.

F. If a secured party assigns a perfected security interest in a watercraft, the receipt by the Department of a statement providing the name of the assignee as secured party is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor. A purchaser of a watercraft subject to a security interest that obtains a release from the secured party indicated in the files of the Department or on the certificate takes free of the security interest and of the rights of a transferee unless the transfer is indicated in the files of the Department or on the certificate.

G. This section does not apply to a security interest:

1. In a watercraft by a person during any period in which the watercraft is inventory held for sale or lease by the person or is leased by the person as lessor if the person is in the business of selling watercraft;

2. In a barge for which no application for a certificate of title has been delivered to the Department; or

3. In a watercraft before delivery if the watercraft is under construction, or completed, pursuant to contract and for which no application for a certificate has been delivered to the Department.

H. This subsection applies if a certificate of documentation for a documented vessel is deleted or canceled. If a security interest in the watercraft was valid immediately before deletion or cancellation against a third party as a result of compliance with 46 U.S.C. § 31321, the security interest is and remains perfected until the earlier of four months after cancellation of the certificate or the time the security interest becomes perfected under this article.

I. A security interest in a watercraft arising under § 8.2-401 or 8.2-505, subsection (3) of § 8.2-711, or subsection (5) of § 8.2A-508 is perfected when it attaches but becomes unperfected when the debtor obtains possession of the watercraft, unless before the debtor obtains possession the security interest is perfected pursuant to subsection A or C.

J. A security interest in a watercraft as proceeds of other collateral is perfected to the extent provided in § 8.9A-315.

K. A security interest in a watercraft perfected under the law of another jurisdiction is perfected to the extent provided in subsection (d) of § 8.9A-316.

2013, c. 787.