Request By:
Mr. James R. English
Marshall County Court Clerk
Courthouse
Benton, Kentucky 42025
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Your question reads:
"If a County Court Clerk is presented with a statement of origin to a motor vehicle or trailer properly assigned and with a lien in favor of some financial institution typed on the statement of origin, but no security agreement is presented, should the Clerk license the vehicle or trailer and note a lien on the Certificate of Title and Registration or refuse to license the vehicle or trailer until presented with a security agreement? "
As we understand from your office, the owner of the motor vehicle purchased it from the manufacturer in Owensboro. A financial institution in Louisville apparently holds a lien of some kind on the vehicle, since there is typed in on the back of the certificate of origin a reference to the holder of the "lien". However, neither the owner nor the so called holder of the lien has presented your office with a security agreement or financing statement involving this vehicle. The owner now wants to register the vehicle for the first time in Kentucky.
The answer is that if the application for registration is made as provided in KRS 186.020 and is accompanied by the applicable document or documents required by KRS 186.020(1), the clerk is required to register the motor vehicle regardless of whether or not a security agreement is presented. The point is that the proper filing of a security agreement under KRS 186.045 is a matter independent of the basic matter of registration of the motor vehicle.
In connection with the lien mentioned on the certificate of origin, you, as clerk, can register the vehicle if the applicant meets the applicable terms of KRS 186.020. However, since no security agreement or financing statement, as treated in KRS Chapter 355, Article 9, has been presented, 1 you have no basis, at this time, under KRS 186.045 for noting the security interest or lien on the owner's copy of the registration receipt or on the clerk's copy of the registration receipt.
"The purpose of lien recordation statutes is to give lienholders a means of preventing the failure of enforcement which would follow acquisition of property by a bona fide purchaser . . ." 51 Am.Jur.2d, Liens, § 8, p. 149. In simple words, the purpose is to give constructive notice to the world.
If the financial institution in Louisville is holding a security agreement or financing statement, it should be presented to the clerk for filing pursuant to KRS 186.045.
Footnotes
Footnotes
1 See KRS 355.9-402 and 355.9-403.