ARIZONA STATE SENATE
vehicles; title and registration
Requires the Arizona Department of Transportation (ADOT), beginning in 2003, to issue a certificate of title with a lien to the lienholder until the lien is satisfied. Establishes the electronic certificates of title system and appropriates approximately $280,000 in FY 2001-2002 and $60,000 in FY 2002-2003 from the state highway fund to ADOT for this system.
According to the National Conference of State Legislatures, 42 states are “title holding” states, which means that the state allows a bank or financial institution that has a lien on a vehicle to retain possession of the vehicle's title until the loan has been paid in full. In Arizona, the borrower maintains possession of the vehicle’s certificate of title while continuing to pay off the loan and the title indicates the lien or encumbrance on the vehicle at the time of transfer. Upon final payment on a lien or encumbrance, the holder of the lien or encumbrance delivers the certificate of title to the owner of the vehicle. On delivery to the Motor Vehicle Division (MVD) by the owner of the vehicle, MVD satisfies the lien in the records and issues a clear title to the owner of the vehicle.
Currently, paper titles are issued to the vehicle owner regardless of a lien on the vehicle. Depending on the number of financial institutions that participate in the electronic certificate of title system, MVD anticipates this legislation will reduce costs associated with the printing of titles and duplicate titles. MVD also expects that the provisions of the electronic certificate of title system will reduce the amount of fraud that occurs with duplicate titles and will provide more consumer protection for persons who are purchasing vehicles that may have outstanding liens.
H.B. 2052 appropriates approximately $280,000 in FY 2001-2002 and $60,000 in FY 2002-2003 from the state highway fund to ADOT for the implementation of the electronic certificates of title system.
1. Repeals statutes that allow the owner of a vehicle to hold the certificate of title containing a lien or encumbrance.
2. Requires ADOT to deliver or mail the original certificate of title to the vehicle owner or to the holder of the lien or encumbrance on the date of application if there are liens or encumbrances on the certificate of title.
3. Requires the holder of the lien or encumbrance to release the lien or encumbrance and deliver the certificate of title to the next holder of the lien or encumbrance or the owner of the vehicle upon payment in full, satisfying the lien or encumbrance.
4. Prescribes requirements regarding delivery of the certificate of title.
5. Authorizes ADOT to impose and collect a civil penalty from the holder of the lien or encumbrance to be deposited into the state highway fund if the holder of the lien or encumbrance refuses or fails to surrender the certificate of title, within 15 days, to the person legally entitled to the title.
6. Establishes a civil penalty of $50 if the certificate of title is surrendered within three additional days and an additional $50 for each additional day exceeding 18 business days not to exceed $500 for each certificate of title.
7. Allows ADOT to satisfy a lien or encumbrance on its records and on the title if the owner of the vehicle submits proof of payment in full of the lien and an affidavit stating that the holder of lien or encumbrance cannot be found.
8. Allows ADOT to satisfy a lien or encumbrance on its records by accepting a certificate of title to the vehicle issued by another jurisdiction and specifies the conditions that must be met.
9. Stipulates that a duplicate of information placed on computer storage devices is deemed an original of the information.
10. Requires ADOT to serve the notice of certificate of title and registration revocation by regular mail rather than certified mail.
11. Allows an applicant to request a hearing within 15 days after the date the notice of revocation is delivered or mailed.
12. Reduces, beginning January 1, 2002, the timeframe that a person is required to apply for a certificate of title from 30 days to within 15 days of the purchase or transfer of the vehicle.
13. Appropriates $277,950 in FY 2001-2002 and $60,000 in FY 2002-2003 from the state highway fund to ADOT for implementation of the electronic certificates of title system and exempts the appropriations from lapsing.
14. Requires the ADOT Director to establish the electronic certificates of title system to allow the voluntary recording of vehicle title information issued, transferred and corrected certificates of title through electronic media and repeals the system on January 1, 2009.
15. Requires the ADOT Director to research methods to allow ADOT, lending institutions and sales finance companies to electronically exchange and maintain information and submit updated title records regarding vehicle security interests.
16. Permits the ADOT Director to limit the number of lending institutions and sales finance companies participating in the system and requires ADOT to encourage companies of various sizes to participate.
17. Allows the ADOT Director to expand the system if after 12 months the Director deems the system a success.
18. Requires the ADOT Director to submit a report regarding the Department’s experience with the electronic certificates of title system to the Legislature and the Governor within 90 days after the system has been in operation for a year.
19. Specifies reporting requirements and repeals the reporting requirements on January 1, 2007.
20. Requires ADOT to retrieve license plates and registration cards for vehicles that have been deemed unsafe or unfit to operate and the registration has been cancelled, suspended, revoked or denied.
21. Requires a person to notify ADOT of a name change in person or in writing.
22. Clarifies that the application form for a certificate of title must be on a form prescribed or authorized by ADOT.
23. Contains a delayed effective date of January 1, 2003 for the electronic certificates of title system and the title holding requirements.
24. Makes technical and conforming changes.
25. Repeals the application for certificate of title on January 1, 2002.
26. Provides for a general effective date unless otherwise noted.
TRANS 1/22/01 DPA 9-0-0-1
APPROP 2/19/01 DP 13-0-0-3
3rd Read 2/26/01 56-0-4-0
Prepared by Senate Staff
March 13, 2001