Brief(1)
H.B. 2259 would amend current law regarding the filing of security interest notices by lienholders on motor vehicles. This bill would increase the amount of time which a dealer or lender may complete a notice of security interest to the Division of Vehicles, from 15 to 20 days.
The bill also would allow the vehicle owner assigning a certificate of title to file with the Division an affidavit indicating that such owner has assigned the certificate of title. The filing of the form will be prima facie evidence that the title was assigned and will create a rebuttable presumption. If the assignee of the title fails to make application for registration, an owner assigning the title and filing the form will not be held liable for damages resulting from the operation of the vehicle.
The Senate Committee amended the bill to provide for a $10 filing fee for the assignment affidavit.
Background
H.B. 2259, as introduced, was requested by the Kansas Automobile Dealers Association (KADA). The President of KADA informed the Committee that in 1997, the Kansas Legislature granted KADA's request to extend this time period for which to process an application for lien perfection and have that lien noted upon the vehicle's title from 10 to 15 days. That same year, Congress passed amendments to the Federal Bankruptcy Code extending the time period to 20 days.
According to the President of KADA, H.B. 2259 conforms Kansas law with the 1997 revision to the Federal Bankruptcy Code. Currently, Kansas law, by operation, effectively cuts off five days which the bankruptcy code would essentially allow if state law did. The proposed amendment would avoid some of the bankruptcy losses which have occurred due to the lien perfection being made outside of the current 15-day period as provided by Kansas law, but within the 20-day time period allowed under federal law. The amendment would allow both the creditor, as well as the Division of Vehicles, additional time in which to process the transaction and perfect the security interest on the vehicle's title.
The Kansas Department of Revenue submitted written comments on the bill. The Department spokesperson indicated support for the bill. No one appeared in opposition to the bill.
The bill, as introduced, was placed on the Consent Calendar.
The House on final action added the provision of H.B. 2153 into H.B. 2259. This provision would allow the vehicle owner to file an affidavit indicating the owner had assigned the title to another owner.
Passage of H.B. 2259, as introduced, would result in negligible administrative costs for the Department of Revenue, which could be administered within existing budgetary resources.
The Department of Revenue indicates that passage of this bill, as amended, would require additional FY 1999 expenditures of $14,450 for computer modifications to the Vehicle Information Processing System (VIPS) and FY 2000 expenditures from the Division of Vehicles Operating Fund totaling $61,434. Included in the FY 2000 estimate is $51,782 for 2.0 new Office Assistant III positions to enter and correct data, to locate records, and to correspond with customers. Also included in the estimate is $9,100 for one-time capital outlay expenditures to establish offices for the 2.0 new FTE positions and $552 for annual communications operating expenditures. The Department's estimate is based on the assumption that one-half of the annual 190,000 title transfers would exercise the affidavit option. The Department would plan to enter the information contained on the form into the VIPS system and then would microfilm the form to facilitate data retrieval in the future event that there is an inquiry.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html.