Establishes the "vehicle lienholder accountability act"; requires lienholders to provide notice to the owner of the vehicle when such lienholder assigns his or her security interest and requires such lienholder to execute a release of his or her security interest, within ten days of such assignment.
TITLE OF BILL: An act to amend the vehicle and traffic law, in relation to establishing the "vehicle lienholder accountability act"; to require lienholders to provide notice to the owner of the vehicle when such lienholder assigns his or her security interest
PURPOSE: To require a vehicle lienholder to provide the vehicle's owner with a timely lien release when such lien is assigned so that the vehicle's owner can obtain a clear title when the lien is satisfied.
SUMMARY OF SPECIFIC PROVISIONS: Subdivision (a) of section 2120 of the vehicle and traffic law is amended to require vehicle lien holders to provide the vehicle's owner with a release of such lien within ten days of the lien being assigned, and subdivision (c) is added to section 2120 to impose a civil penalty not to exceed one thousand dollars for failure to comply.
JUSTIFICATION: Vehicle lien holders often assign their security interest without generating a lien release to the owner, and the new lienholder often fails to properly register the lien with Department of Motor Vehicles in order to avoid the fees due. As a result, many vehicle owners do not know who has a security interest in their vehicle, and are unable to obtain a clean certificate of title when they have paid off their vehicle loan. The original lienholder should be required to release his or her security interest in the vehicle once the lien has been assigned.
PRIOR LEGISLATIVE HISTORY: 2010: S.7831 - Passed Transportation; Committed to Senate Codes Committee.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Shall take effect on the thirtieth day after it becomes law.
STATE OF NEW YORK ________________________________________________________________________ 3302 2011-2012 Regular Sessions IN SENATE February 15, 2011 ___________Introduced by Sen. ADDABBO -- read twice and ordered printed, and when printed to be committed to the Committee on Transportation AN ACT to amend the vehicle and traffic law, in relation to establishing the "vehicle lienholder accountability act"; to require lienholders to provide notice to the owner of the vehicle when such lienholder assigns his or her security interest THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. This act shall be known and may be cited as the "vehicle lienholder accountability act". S 2. Section 2120 of the vehicle and traffic law, as added by chapter 1134 of the laws of 1971, is amended to read as follows: S 2120. Assignment by lienholder. (a) A lienholder may assign, abso- lutely or otherwise, his OR HER security interest in the vehicle to a person other than the owner without affecting the interest of the owner or the validity of the security interest,
[but any]PROVIDED THAT SUCH LIENHOLDER NOTIFIES THE OWNER OF THE VEHICLE OF SUCH ASSIGNMENT, AND EXECUTES A RELEASE OF HIS OR HER SECURITY INTEREST WITHIN TEN DAYS OF SUCH ASSIGNMENT. ANY person without notice of the assignment is protected in dealing with the lienholder as the holder of the security interest and the lienholder remains liable for any obligations as lien- holder until the assignee is named as lienholder on the certificate. (b) The assignee may, but need not to perfect the assignment, have the certificate of title endorsed or issued with the assignee named as lien- holder, upon delivering to the commissioner an assignment by the lien- holder named in the certificate in the form the commissioner prescribes. Upon the request of the assignee the commissioner shall request the owner to deliver to the commissioner the certificate of title. (C) A LIENHOLDER WHO VIOLATES THE PROVISIONS OF THIS SECTION SHALL PAY A CIVIL PENALTY NOT TO EXCEED ONE THOUSAND DOLLARS. S 3. This act shall take effect on the thirtieth day after it shall have become a law.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD05072-01-1