Request By:
Mary Ann Baron, State Director
Farmers Home Administration
333 Waller Avenue
Lexington, Kentucky 40504
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Ross T. Carter, Assistant Attorney General
You have asked whether you may file a continuation statement on secured property that includes a motor vehicle. Your question arises because the Trigg County Clerk refused to allow you to file a continuation statement on a security interest in crops, livestock, farm equipment, and a pickup truck. The clerk informed you that all secured interests in motor vehicles must be noted on the title rather than through a UCC filing. You object to changing the manner of perfecting your security interest because of the possibility that your lien will lose priority.
In 1988 Kentucky adopted a system of noting secured interests on motor vehicles on the vehicle title. The clerk cited to you a section of the lien title law (KRS 186A.190) that says, "The perfection and discharge of a security interest in any property for which has been issued a Kentucky certificate of title shall be by notation on the certificate of title." This statute by its own terms applies only to perfection and discharge. Your lien on the pickup truck has already been perfected, and in fact has been perfected since you filed the original financing statement in 1981. Therefore we do not interpret KRS 186A.190 as prohibiting the filing of a continuation statement on your security interest in the truck.
The county clerk also informed you that KRS 186A.197(2) provides that your security interest in the truck could be continued only by applying for a certificate of title showing the lien. The first sentence of subsection 2 of the statute says, "Notwithstanding the provisions of KRS 355.9-403, no continuation statement shall be filed under KRS 355.9-403 for security interests in property eligible to be titled through issuance of a Kentucky certificate of title, but for which no Kentucky certificate of title has been issued." Obviously this statute is intended to prevent the filing of continuation statements on vehicles without a Kentucky title. The statute is silent regarding vehicles with a Kentucky title. We assume that a Kentucky title has been issued for the pickup truck that is the subject of your security interest, and consequently we conclude that KRS 186A.197(2) does not apply to your situation.
Subsection 1 of KRS 186A.197 provides for the transition from UCC filings to the new lien title system. The statute provides:
If a Kentucky certificate of title is outstanding as of March 31, 1988, without the notation of a valid lien representing a security interest perfected under this chapter, the transportation cabinet upon application of either the secured party or the debtor shall cancel the current certificate of title and issue a new certificate of title with the lien noted thereon. The security interest represented by the lien shall be considered perfected as of the original date of filing of the title lien statement or financing statement.
This statute allows either the debtor or the secured party to request a title showing the lien, but it does not require either party to do so. If a lien title is issued, the secured party's security interest relates back to the date of the UCC filing, so the secured party's lien does not lose priority by the issuance of the new certificate of title.
We conclude that you may request a new certificate of title on the pickup truck, but you are not required to do so. We find nothing in the lien title law that prohibits the filing of a continuation statement on motor vehicles with a Kentucky certificate of title, and so we conclude that the clerk should accept and file your continuation statement.