2013 Kentucky Revised Statutes CHAPTER 186 - LICENSING OF MOTOR VEHICLES, OPERATORS, AND TRAILERS 186.045 Discharge by payment in full -- Termination statement and record of termination of security interest -- Filing -- Time -- Fees -- Notations showing security interest. (Effective January 1, 2014)
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186.045Discharge by payment in full -- Termination statement and record of
termination of security interest -- Filing -- Time -- Fees -- Notations
showing security interest.
(1)
(2)
(3)
(4)
A perfected security interest in a motor vehicle that has been satisfied by
payment in full shall be deemed to have been discharged if one (1) or both of
the following events has occurred:
(a) The funds to pay in full and discharge the security interest have been
provided to the secured party in the form of a cashier's check, certified
check, or wire transfer; or
(b) The debt has been paid to a secured party who is no longer in existence
or has failed to file the necessary documents to discharge the lien.
If payment in full has been made under subsection (1)(a) of this section, the
discharge of the lien shall be made not later than ten (10) days from the receipt
of the payment.
When a security interest has been paid in full and a termination statement or
discharge has not been filed, the debtor may petition the Circuit Court in the
county of the debtor's residence to order the discharge of the security interest.
The debtor shall present written evidence to the Circuit Court that the security
interest has been paid in full. If the evidence presented to the Circuit Court
proves to the court's satisfaction that the security interest has been paid in full,
the court shall order the county clerk to note the termination on the title and to
remove the lien from the Automated Vehicle Information System (AVIS). A
copy of the court's order shall immediately be sent to the county clerk in the
county where the security interest was originally filed and the county clerk shall
discharge the security interest and remove the lien information from AVIS in
accordance with the provisions of this section.
Whenever a security interest has been discharged, other than by proceedings
under Part 6 of Article 9 of KRS Chapter 355 or similar proceedings, the
secured party shall deliver an authenticated termination statement in the
manner required by KRS 355.9-513 and 186A.195 to the county clerk of the
county in which the title lien statement was submitted. The secured party shall
also deliver a copy of the termination statement to the debtor or the debtor's
transferee. For failure to file the termination statement within the allowable
time, the secured party shall be subject to the penalty provided in KRS
186.990(1). Except as provided in subsection (3) of this section, within five (5)
days after the receipt of such documents, the county clerk shall note the filing
in the index, in language prescribed by the cabinet, that the termination
statement has been filed. Upon presentation of the owner's title showing a
security interest to the county clerk where the termination statement was
submitted, and with the copy of the termination statement submitted by the
secured party, the clerk shall discharge the security interest by noting on the
title that the termination statement has been filed and place the seal of the
county clerk thereon. The clerk shall return the owner's title to the owner. The
county clerk shall then file the termination statement in the place from which
the title lien statement was removed. Termination statements shall be retained
in the clerk's files for a period of two (2) years subsequent to the date of filing a
statement, at which time they may be destroyed. The fee for these services are
(5)
(6)
(7)
(8)
(9)
included in the provisions of KRS 186A.190.
Upon presentation of an owner's title showing a security interest to the county
clerk of a county where the termination statement was not delivered, the county
clerk shall access the automated system to determine whether a record of
termination of the security interest has been entered into the automated system
by the county clerk where the termination statement was delivered by the
secured party as provided in KRS 186A.210. If a record of termination has
been entered into the automated system, the county clerk of the county where
the termination statement was not delivered, shall note the discharge of the
security interest on the certificate of title by noting that the termination
statement has been delivered, the county where it was delivered, and placing
the seal of the county clerk thereon and may rely on the automated system to
do so. If a record of termination has not been entered into the automated
system, the county clerk of the county other than where the termination
statement was delivered shall not make any notation upon the certificate of title
that the security interest has been discharged or that a termination statement
has been delivered to the county where the title lien statement was submitted.
Whenever any secured party repossesses a vehicle titled in Kentucky, for
which a security interest is in existence at the time of repossession, and
disposes of the vehicle pursuant to the provisions of KRS Chapter 355, the
secured party shall present, within fifteen (15) days after such disposition, the
vehicle's license plate if the plate has not been retained by the previous owner,
an affidavit in a form prescribed by the department, proof of notification of all
interested parties pursuant to KRS 186A.190 and 355.9-611, and a termination
statement or proof that a termination statement has been filed. The new owner
shall pay to the county clerk all applicable fees for titling and transferring the
vehicle into his or her name. Upon receipt of such documents, the county clerk
who issued the lien shall then omit from the title he makes application for any
information relating to the security interest under which the vehicle was
repossessed or any security interest subordinate thereto. However, any
security interest, as shown by such title which is superior to the one under
which the vehicle was repossessed, shall be shown on the title issued by the
clerk unless the prior secured party has discharged the security interest in the
clerk's office or proof of termination is submitted, if the prior security interest
was discharged in another clerk's office.
Whenever any vehicle brought into Kentucky is required to be titled and the
vehicle is then subject to a security interest in another state as shown by the
out-of-state documents presented to the clerk, the county clerk is prohibited
from processing the application for title on the vehicle unless the owner obtains
from the secured party a financing statement or title lien statement and
presents same to the clerk along with the fees required in KRS 186A.190. The
clerk shall note the out-of-state security interest on the certificate of title. This
provision does not apply to vehicles required to be registered in Kentucky
under forced registration provisions under KRS 186.145.
The fees provided for in this section are in addition to any state fee provided for
by law.
Any person violating any provision of this section or any person refusing to
surrender a certificate of title registration and ownership or transfer certificate
upon request of any person entitled thereto, is subject to the penalties provided
in subsection (1) of KRS 186.990.
(10) The county clerk is prohibited from noting any security interest on a certificate
of title on any vehicle subject to the provisions of KRS Chapter 186A if a
certificate of title therefor is presented to him which has all the spaces provided
thereon for noting security interests fully exhausted. The owner is responsible
for ensuring that a discharge is noted on the certificate of title for each security
interest and then a duplicate title as provided for in KRS 186A.180 shall be
obtained from the clerk by the owner of the vehicle.
(11) Security interests in vehicles sold to or owned by residents of other states shall
be perfected in the state of the nonresident and repossession of the vehicle
shall be taken pursuant to the laws of that state, unless:
(a) The vehicle is principally operated in Kentucky;
(b) The vehicle is properly titled in Kentucky under KRS Chapter 186A; and
(c) The security interest is authorized to be noted on the certificate of title by
the county clerk under KRS Chapter 186A.
Effective:January 1, 2014
History: Amended 2011 Ky. Acts ch. 5, sec. 2, effective January 1, 2013. -Amended 2004 Ky. Acts ch.25, sec.1, effective July 13, 2004. -- Amended 2003
Ky. Acts ch.103, sec.1, effective June 24, 2003. -- Amended 2000 Ky. Acts
ch.408, sec.178, effective July 1, 2001. -- Amended 1998 Ky. Acts ch.128,
sec.9, effective July 15, 1998. -- Amended 1986 Ky. Acts ch.118, sec.103,
effective July 1, 1987. -- Amended 1980 Ky. Acts ch.321, sec.1, effective July
15, 1980. -- Amended 1978 Ky. Acts ch.84, sec.5, effective June 17, 1978. -Amended 1974 Ky. Acts ch.222, sec.2. -- Amended 1972 Ky. Acts ch.203,
sec.35. -- Amended 1966 Ky. Acts ch.83, sec.1; and ch.255, sec.169. -- Created
1964 Ky. Acts ch.59, sec.2.
Legislative Research Commission Note (7/12/2012).The amendment of this
statute in 2011 Ky. Acts ch. 5 was to be effective January 1, 2013, pursuant to
Section 7 of that Act. However, in 2012 Ky. Acts ch. 12, sec. 1, 2011 Ky. Acts
ch. 5, sec. 7, was repealed, and a new effective date of January 1, 2014, was
established for the 2011 amendment of this statute, pursuant to 2012 Ky. Acts
ch. 12, sec. 2.
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