To:Countytreasurers and Countymotor Vehicle Staff

Memorandum

07-027

To:CountyTreasurers and CountyMotor Vehicle Staff

Titles and Registrations Associates

From:Michael McLin, Titles and Registrations Bureau Manager

Date:June 21, 2007

RE:HB 2373-Limiting the Number of Liens on Certain Vehicles

Background

Effective July 1, 2007, HB 2373 amends KSA 8-135 (c)(5)in part to read: On and after July 1, 2007, only one lien shall taken or accepted for vehicles with a gross vehicle weight rating of 26,000 pounds or less.

KSA 8-135(c)(6) was also amended in part to read: On and after July 1, 2007, only one lien may be taken or accepted for security for an obligation to be secured by a lien to be shown on a certificate of title for vehicles with a gross vehicle weight rating, of 26,000 pounds or less. A refinancing shall not be subject to the limitation of this act. A refinancing is deemed to occur when the original obligation is satisfied and replaced by a new obligation. Lien obligations created before July 1, 2007, which are of a continuing nature shall not be subject to the limitations of this act until the obligation is satisfied. A lien in violation of this provision is void. Upon receipt thereof, the division shall issue a new certificate of title showing the liens or encumbrances so created, but only one lien or encumbrance may be shown upon a title for vehicles with a gross weight of 26,000 pounds or less, and not more than two liens or encumbrances may be shown upon a title for vehicles in excess of 26,000 pounds gross vehicle weight rating.

PROCEDURES

Lien Limits

1. All autos, motorcycles, motorized bicycles, ATV’s, work site utility vehicles, trailers and heavy trucks registered for 26,000 pounds or less will be limited to only one (1) lien as of July 1, 2007.
2. Heavy trucks for more than 26,000 pounds (30M) may have not more than two (2) liens listed on the vehicle’s title.
3. Mobile or manufactured homes may have not more than two (2) liens listed on their title.

RefinancingSecured Title Application for Autos, Motorcycles, Motorized Bicycles, ATV’s, Work Site Utility Vehicles, Trailers and Heavy Trucks Registered for 26,000 pounds or less

If an owner of a vehicle is going to change the lien holder for his or her vehicle (refinancing to a new lien holder) the existing lien holder must release their security interest (notarized lien release) and the new lien holder must submit a secured title application. KSA 8-135(c)(6) requires the lien holder to submit the paperwork and the application secured title.

Therefore, in addition to all normally required paperwork* for a secured title application, as of July 1, 2007, the lien holder submitting the secured title application will also need to submit a proper lien release if the existing title record indicates a lien or encumbrance.

An application cannot be accepted if the current record for the vehicle (title or registration receipt) indicates there is a lien or encumbrance currently listed on the vehicle’s record, unless there is a properly executed release of lien attached.

*Normally required paperwork: Application for Secured/Duplicate/Reissued Title, TR-720B;proof that the vehicle is currently titled in the applicant’s name (Kansas title or current registration receipt indicating an etitle).

RefinancingSecured Title Application for Heavy Trucks Registered Over 26,000 Pounds andMobile or Manufactured Homes

There is no change from the current procedures for heavy trucks (30M or higher) or mobile/manufactured homes regarding the maximum number of liens, two (2), and the procedure for adding a second lien. A lien release from the first lien holder to add the second lien holder is not needed.

June 21, 20071 of 207-027