Request By:
Mr. Ralph Morris
Mercer County Court Clerk
Harrodsburg, Kentucky 40330
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Your request for an opinion concerns the filing of a financial statement or security agreement. The facts underlying your problem and the questions were stated as follows:
"An individual whose residence is in Mercer County, Kentucky owns a large tractor trailer which at present time he has licensed in another State and is principally operated in Ohio & Indiana and does not have the vehicle registered in the State of Kentucky. A bank in Louisville has sent to us a Financing Statement to be filed on this vehicle with no registration but stating on the document that the same will not be operated on Kentucky highways. My understanding of the Commercial Code is that we can not file a financing statement unless we enter the lien on the registration where it is a licensed motor vehicle. My question: Can we record the financing statement without having the registration to enter the lien thereon? If not, what alternative does the bank and the individual have in having recorded security on this motor vehicle? "
KRS 186.045(11) reads:
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"(11) Security interests in vehicles sold to or owned by residents of other states must be perfected in the state of such nonresident and repossession of the vehicle must be taken pursuant to the laws of such state, unless the vehicle is principally operated in Kentucky and is properly registered herein under KRS 186.020 and the security interest is authorized to be filed with the county clerk under KRS 355.9-401. However, a security interest on any vehicle which is not used on the public highways and for that reason is not required to be registered for highway use may be filed with the county clerk as otherwise permitted under KRS chapter 355."
Since the vehicle is not used on the highways of Kentucky, it is not required to be registered in Kentucky. However, we must look to KRS Chapter 355 for possible authority for the filing of the security interest in Mercer County, Kentucky.
KRS 355.9-401(1)(c) provides that the proper place of filing the security interest, where certain enumerated situations do not exist [as we think the case is here], and where the debtor is a resident of this state, is in the office of the county court clerk in the county of the debtor's residence. No condition is imposed as to the specific geographical location and use of the collateral. Moreover, since the vehicle is not being used in Kentucky, no registration in Kentucky is required, and under the permissive application of KRS Chapter 355 [specifically KRS 355.9-401] as authorized by KRS 186.045(11), the security interest document may be filed with the county court clerk of Mercer County.
An affidavit of the owner or secured party should be filed with you indicating that the vehicle is not being used on the highways of Kentucky and thus does not require registration in Kentucky. We assume that the chief place of business of the debtor is in Kentucky and that such automotive equipment used in Ohio and Indiana is properly classified as equipment by the debtor. If so, KRS 355.9-401 (1)(c) would govern as to the proper place of filing the security interest. See KRS 355.9-103(2). Such latter facts, if true, should be included in the affidavit filed with you. If the chief place of business were in Ohio, then the law of Ohio would govern, and filing in Kentucky would not be permissible. This would assume that Ohio provides for perfection of a security interest.