HB-6487, As Passed Senate, December 18, 2018

SUBSTITUTE FOR

HOUSE BILL NO. 6487

A bill to amend 1994 PA 451, entitled

"Natural resources and environmental protection act,"

by amending sections 81103, 81104, 81105, 81108, 81109, 81111,

81112, and 81113 (MCL 324.81103, 324.81104, 324.81105, 324.81108,

324.81109, 324.81111, 324.81112, and 324.81113), sections 81103,

81104, 81105, and 81111 as added by 1995 PA 58, section 81108 as

amended by 2012 PA 28, section 81109 as amended by 1996 PA 175,

section 81112 as amended by 2005 PA 271, and section 81113 as

amended by 1997 PA 102, and by adding section 81114f.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 81103. (1) This section is subject to section 81109(5).

(2) After April 1, 1991, every ORV sold by a dealer to a

retail purchaser shall be subject to the certificate of title

provisions of this part.

(3) ~~(2)~~ After April 1, 1991, a person who purchases or

otherwise acquires an ORV shall ~~make application~~ apply for a

certificate of title as provided in this part.

(4) ~~(3)~~ After April 1, 1991, the owner of an ORV that has not

been titled pursuant to subsection ~~(1)~~ (2) or ~~(2)~~ (3) or the code

may apply for and, if otherwise eligible, receive a certificate of

title issued under this part. If the ORV was previously titled

under the code, it is not eligible for titling under this part.

Sec. 81104. The owner of an ORV that has been and is titled

under this part may ~~, if the ORV is otherwise eligible,~~ apply for

and, if otherwise eligible, receive a title to the ORV under the

code. If the owner applies for a title under the code, ~~the~~ any

certificate of title issued under this part shall at that time be

surrendered to the department of state.

Sec. 81105. (1) ~~After~~ Subject to subsection (2), after an ORV

has been titled under this part, both of the following ~~shall~~

~~occur:~~apply:

(a) The owner, except as provided in section 81104, shall not

sell or otherwise assign ownership in the ORV without delivering to

the transferee a certificate of title showing assignment of the ORV

in the transferee's name.

(b) A person shall not purchase or otherwise acquire an ORV

without obtaining a certificate of title to it in the person's name

pursuant to either this part or the code.

(2) As provided under section 81109(5), the department of

state is not required to issue a certificate of title to the owner

of an ORV if the title is subject to a security interest.

Sec. 81108. (1) An application for an ORV certificate of title

shall be on a form prescribed by the department of state. The

application shall include a certification. The owner or purchaser

shall sign the application or, if the application is filed

electronically, provide information requested by the department of

state to verify the owner's identity. The application shall

contain, in addition to other information required by the

department of state, the following information:

(a) The applicant's name and address.

(b) A statement of any security interest or other liens on the

ORV, along with the name and address of any lienholder.

(d) A description of the ORV, including the year, make, model

or series, and vehicle identification number.

(2) An application for an ORV certificate of title that

indicates the existence of a security interest in the ORV shall, if

requested by the security interest holder, be accompanied by a copy

of the security agreement, which may be unsigned. The department of

state shall indicate on the copy the date and place of filing and

shall return the copy to the person who filed the application. The

filer shall forward the copy to the security interest holder

identified in the application.

(3) Receipt by the secretary of state of a properly tendered

application for an ORV certificate of title that indicates the

existence of a security interest in the ORV is a condition of

perfection of a security interest in the ORV, unless, under section

81109(5), the department of state does not issue certificates of

title for ORVs subject to a security interest, and is equivalent to

filing a financing statement under the uniform commercial code,

1962 PA 174, MCL 440.1101 to ~~440.11102,~~ 440.9994, with respect to

the ORV. When a security interest in an ORV is perfected, it has

priority over the rights of a lien creditor as lien creditor is

defined in section 9102 of the uniform commercial code, 1962 PA

174, MCL 440.9102.

Sec. 81109. (1) The purchaser or other transferee of an ORV

subject to the titling provisions of this part shall, except as

provided in subsection (2), ~~make application~~ apply to the

department of state for issuance of a certificate of title to the

ORV. The application shall be filed within 15 days after the date

of purchase or transfer.

(2) A dealer selling ORVs at retail, within 15 days after

delivering an ORV to a retail purchaser, shall ~~make application~~

apply to the department of state for issuance of an ORV certificate

of title in the purchaser's name. The purchaser of the ORV shall

sign the application and other papers necessary to enable the

dealer to secure the title from the department of state. If the ORV

was not previously titled, the application shall be accompanied by

a manufacturer's certificate of origin.

(3) At the request of the applicant, the department of state

shall process an application for an ORV certificate of title on an

expedited basis.

(4) An application filed with the department of state pursuant

to this section shall be accompanied by the fee or fees prescribed

in section 81110.

(5) The department of state may require that all transactions

concerning ORV security interests be conducted by electronic means,

as determined by the department of state. In that case, if an ORV

is subject to a security interest, the department of state is not

required to issue a certificate of title to the owner of the ORV or

a lienholder if it maintains a record of title electronically.

After all security interests have been terminated, or for purposes

of retitling the ORV in another state or any other purpose

considered appropriate by the department of state, the department

of state may issue a paper copy of the ORV title to the ORV owner.

(6) An ORV sale transaction in which a security interest is

entered by electronic means shall include a document recording

entry of the electronic security interest and information regarding

the financial institution that holds the security interest. When a

secured party is presented with payment in satisfaction of the

security interest, a secured receipt in a form approved by the

department of state may be produced and submitted to the department

of state in lieu of the certificate of title for purposes of

transferring ownership in the ORV.

(7) ~~(5)~~ Beginning January 1, 1992, a person who violates this

section is responsible for a state civil infraction and may be

ordered to pay a civil fine of not more than $100.00.

Sec. 81111. (1) The department of state may refuse to issue an

original or duplicate ORV certificate of title under the

circumstances provided in section 81109(5) or if any of the

following occur:

(a) The applicant fails to furnish all required information or

reasonable additional information requested by the department of

state.

(b) The required fee has not been paid.

title under this part.

(d) The ORV is titled under the code.

(e) The application contains a false or fraudulent statement.

(f) The department of state has reasonable grounds to believe

that the ORV was stolen or embezzled.

(2) If Subject to subsection (1), if satisfied that the

applicant is the owner of the ORV and is otherwise entitled to an

ORV certificate of title, the department of state shall issue an

ORV certificate of title in the applicant's name. The certificate

shall be mailed or otherwise delivered to the owner of the ORV or

to another person specified by the owner in a separate instrument,

in a form prescribed by the department of state.

(3) If the secretary of state is not satisfied as to the

ownership of an ORV which is not a late model ORV and whose value

does not exceed $1,500.00, the secretary of state shall require the

applicant to certify that the applicant is the owner of the ORV and

therefore entitled to make application for a certificate of title

for the ORV.

Sec. 81112. (1) An ORV certificate of title shall be

manufactured in a manner to prevent as nearly as possible the

reproduction, alteration, counterfeiting, forging, or duplication

of the certificate without ready detection. An ORV certificate of

title shall contain on its face the information set forth in the

application, including a notation of all secured interests in the

ORV, the date on which the application was filed, and other

information required by the department of state.

(2) The department of state shall prescribe a uniform method

of numbering ORV certificates of title.

(3) An ORV certificate of title shall contain a form for

assignment and warranty of title by the owner with space for the

notation of a security interest in the ORV. The ORV certificate of

title may also contain other forms that the department of state

considers necessary to facilitate the effective administration of

this part. The certificate shall bear the coat of arms of this

state.

(4) A person ~~who intentionally reproduces, alters,~~

~~counterfeits, forges, or duplicates~~ shall not do any of the

following:

(a) Reproduce, alter, counterfeit, forge, or duplicate an ORV

certificate of title or ~~who uses a~~ hold or use an ORV certificate

of title knowing it is reproduced, altered, counterfeited, forged,

or duplicated. ~~ORV certificate of title~~

(b) Fraudulently indicate on an ORV certificate of title that

there is no security interest on record for the ORV.

from the holder of a security interest in an ORV indicating that

the security interest has been released.

(5) A person who violates subsection (4) is subject to the

following penalties:

(a) If the intent of ~~reproduction, alteration, counterfeiting,~~

~~forging, duplication, or use~~ the violation was to commit or aid in

the commission of an offense punishable by imprisonment for 1 or

more years, the person committing the ~~reproduction, alteration,~~

~~counterfeiting, forging, duplication, or use~~ violation is guilty of

a misdemeanor punishable by imprisonment for a period equal to that

which could be imposed for the commission of the offense the person

had the intent to aid or commit or a fine of not more than

$5,000.00, or both.

(b) If the intent of the ~~reproduction, alteration,~~

~~counterfeiting, forging, duplication, or use~~ violation was to

commit or aid in the commission of an offense punishable by

imprisonment for not more than 1 year, the person committing the

~~reproduction, alteration, counterfeiting, forging, duplication, or~~

~~use~~ violation is guilty of a misdemeanor punishable by imprisonment

for not more than 1 year or a fine of not more than $1,000.00, or

both.

(6) A person who is convicted of a violation of subsection

(4)(b) or (c), in addition to any other penalty, shall pay

restitution to the holder of a security interest in the ORV in the

amount of the outstanding lien on the ORV.

Sec. 81113. (1) If an ORV certificate of title or duplicate

certificate of title is lost or mutilated or becomes illegible, the

person entitled to possession of the certificate, or the legal

representative or successor in interest to the titleholder of

record, may ~~make application~~ apply to the department of state for a

duplicate ORV certificate of title. Upon receipt of the

application, the fee prescribed in section 81110, and information

satisfactory to the department of state to establish entitlement to

the duplicate, the department of state may issue a duplicate ORV

certificate of title to the applicant. As provided under section

81109(5), the department of state is not required to issue a

duplicate certificate of title to the owner of an ORV if the title

is subject to a security interest.

(2) ~~Every~~ A duplicate ORV certificate of title shall contain

the legend: "This is a duplicate certificate of title and may be

subject to the rights of a person under the original certificate.".

(3) The secretary of state shall maintain 1 or more indexes

pertaining to ORV certificates of title. Upon receiving an

application for an ORV certificate of title, the secretary of state

may check the information in the application and accompanying

documents against the indexes of titled, registered, stolen, and

recovered ORVs and against other records maintained by the

secretary of state.

Sec. 81114f. (1) The secretary of state may enter into 1 or

more contracts under this section to establish, implement, and

operate an electronic lien title system to process the notification

and release of security interests in ORVs through electronic file

transfers, or as otherwise determined by the secretary of state, in

lieu of the issuance and maintenance of paper documents otherwise

required by law. Any such contract shall require the protection of

proprietary information in the electronic lien title system and

provide for the protection of a competitive free market.

(2) Except for persons who are not normally engaged in the

business or practice of financing ORVs, all secured parties are

required to participate in the electronic lien title system.

(3) For the purposes of this part, any requirement that a

security interest or other information appear on a certificate of

title is satisfied by the inclusion of that information in an

electronic file maintained in an electronic lien title system. The

satisfaction of a security interest may be electronically

transmitted to the secretary of state. A secured party shall

execute a release of its security interest in an ORV in a manner

prescribed by the department not more than 14 days after the

secured party receives the payment in satisfaction of the security

interest. If the certificate of title is in the possession of the

ORV owner, the secured party shall deliver the release to the ORV

owner or as otherwise directed by the owner. However, if the

certificate of title is held electronically as provided under

section 81109(5), the secured party shall deliver the release of

security interest to the department of state, and the department of

state shall cancel the security interest. If the secured party

fails to comply with these requirements for the release of a

secured interest, the secured party is liable to the ORV owner for

all damages sustained by the owner because of the failure to

comply. The electronic lien title system shall provide a mechanism

by which an ORV dealer may assign ownership of an ORV without proof

that the prior security interest was satisfied existing on the

electronic lien title system. However, in the event of such an

assignment, the dealer warrants that the title is free and clear of

all liens and assumes responsibility for the satisfaction of the

security interest.

(4) A certified copy of the secretary of state's electronic

record of a security interest is admissible in any civil, criminal,

or administrative proceeding in this state as evidence of the

existence of the security interest. If a certificate of title is

maintained in the electronic lien title system, a certified copy of

the secretary of state's electronic record of the certificate of

title is admissible in any civil, criminal, or administrative

proceeding in this state as evidence of the existence and contents

of the certificate of title.

(5) The secretary of state may determine any requirements

necessary to carry out this section, including, but not limited to,

1 or more of the following:

(a) Monitoring the reasonable fees charged by service

providers or a contractor for the establishment and maintenance of

the electronic lien title system.

(b) The qualifications of service providers for participation

in the electronic lien title system.

contract with the secretary of state to establish, implement, and

operate the electronic lien title system.

(d) Program specifications that a contractor must adhere to in

establishing, implementing, and operating the electronic lien title

system.

(6) The electronic lien title system under this section shall

be established, implemented, and operational by February 16, 2021.

(7) By February 16, 2021, the department shall require a

person to enter evidence of security interests and any related

information into the electronic lien title system in lieu of paper

documents.

(8) As used in this section:

(a) "Contractor" means a person who enters into a contract

with the secretary of state to establish, implement, and operate

the electronic lien title system described in this section.

(b) "Electronic lien title system" means a system to process

the notification and release of security interests through

electronic file transfers that is established and implemented under

this section.

parties with software to manage electronic lien and title data as

provided under this section.

Enacting section 1. This amendatory act takes effect 90 days

after the date it is enacted into law.