As Introduced

128th General Assembly
Regular Session
2009-2010
H. B. No. 372


Representatives Amstutz, Yuko 

Cosponsors: Representatives Blessing, Chandler, Combs, Derickson, Evans, Grossman, Lehner, Murray, Okey 



A BILL
To amend sections 1548.20, 4505.13, and 4519.68 of 1
the Revised Code to require a secured party to 2
convey a physical certificate of title to the 3
owner of a watercraft, outboard motor, motor 4
vehicle, off-highway motorcycle, or all-purpose 5
vehicle upon discharge of all security interests.6


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That sections 1548.20, 4505.13, and 4519.68 of the 7
Revised Code be amended to read as follows:8

       Sec. 1548.20.  (A) Chapter 1309. of the Revised Code does not 9
permit or require the deposit, filing, or other record of a 10
security interest covering a watercraft or outboard motor for 11
which a certificate of title is required. Any security agreement 12
covering a security interest in a watercraft or outboard motor, if 13
it is accompanied by delivery of a manufacturer's or importer's 14
certificate and followed by actual and continued possession of 15
that certificate by the holder of the instrument, or, in the case 16
of a certificate of title, if a notation of the security agreement 17
has been made by a clerk of a court of common pleas on the face of 18
the certificate of title or the clerk has entered a notation of 19
the agreement into the automated title processing system and a20
physical certificate of title for the watercraft or outboard motor21
has not been issued, shall be valid as against the creditors of22
the debtor, whether armed with process or not, and against 23
subsequent purchasers, secured parties, and other lienholders or 24
claimants. All security interests, liens, mortgages, and25
encumbrances entered into the automated title processing system in 26
relation to a particular certificate of title, regardless of 27
whether a physical certificate of title is issued, take priority 28
according to the order of time in which they are entered into the 29
automated title processing system by the clerk. Exposure for sale 30
of any watercraft or outboard motor by its owner, with the 31
knowledge or with the knowledge and consent of the holder of any32
security interest, lien, mortgage, or encumbrance on the33
watercraft or outboard motor, shall not render the security34
interest lien, mortgage, or encumbrance ineffective as against the 35
creditors of the owner or against holders of subsequent security 36
interests, liens, mortgages, or encumbrances upon the watercraft 37
or outboard motor.38

       (B) If a secured party presents evidence of the security 39
interest to a clerk of a court of common pleas together with the 40
certificate of title, if a physical certificate of title for the 41
watercraft or outboard motor exists, and the fee prescribed by 42
section 1548.10 of the Revised Code, the clerk, unless the secured 43
party specifically requests the clerk not to issue a physical 44
certificate of title, shall issue a new original certificate of 45
title from the automated title processing records. The new 46
certificate shall indicate the security interest and the date of 47
the security interest. The clerk also shall note the security 48
interest and its date in the clerk's files and enter that 49
information into the automated title processing system, and on 50
that day shall notify the chief of the division of watercraft. The 51
clerk shall indicate by appropriate notation on the security 52
agreement itself the fact that the security interest has been 53
noted on the certificate of title.54

       (C) If a security interest is fully discharged as a result of55
its holder's receipt of good funds in the correct amount and if56
the holder holds a physical certificate of title, the holder shall 57
note the discharge of the security interest over the holder's58
signature on the face of the certificate of title, or, if there is 59
not sufficient space for the notation on the face of the 60
certificate of title, the holder shall note the discharge over the 61
holder's signature on a form prescribed by the chief. Except as62
otherwise provided in this section, prior to delivering the63
certificate of title to the owner, the holder or the holder's64
agent shall convey the certificate of title or a separate sworn65
statement of the discharge of the security interest and any66
additional information the chief requires to a clerk. The67
conveyance shall occur not more than seven business days after the68
date good funds in the correct amount to fully discharge the69
security interest have been credited to an account of the holder,70
provided the holder has been provided accurate information71
concerning the watercraft or outboard motor. Conveyance of the72
certificate of title or separate sworn statement of the discharge73
within the required seven business days may be indicated by74
postmark or receipt by a clerk within that period. If the75
discharge of the security interest appears to be genuine, the76
clerk shall note the discharge of the security interest on the77
face of the certificate of title, if it was so conveyed, and note78
it in the automated title processing system.79

       If a security interest is fully discharged as a result of its 80
holder's receipt of good funds in the correct amount and the 81
holder does not hold a physical certificate of title, when the 82
holder notifies a clerk of the discharge of its security interest, 83
the holder at that time also may request the clerk to issue a 84
physical certificate of title to the watercraft or outboard motor. 85
The request shall specify whether the clerk is to send the 86
certificate of title directly to the owner or to the holder or the 87
holder's agent for transmission to the owner. If such a request is 88
made, the clerk shall issue a physical certificate of title and 89
send it to the specified person.90

        The clerk shall not honor such a request for a physical 91
certificate of title if it is not made by the holder at the same 92
time as the holder's notification to the clerk of the discharge of 93
its security interest.94

       (D)(1) In all cases, a secured party may choose to present a95
clerk with evidence of a security interest via electronic means,96
and the clerk shall enter the security interest into the automated97
title processing system. A secured party also may choose to notify 98
a clerk of the discharge of its security interest via electronic 99
means, and the clerk shall enter the cancellation into the 100
automated title processing system.101

       (2) In the case of a security interest that is being102
satisfied by a watercraft dealer to whom a certificate of title is103
being transferred, the cancellation of the security interest shall104
occur during the course of the transfer. The dealer shall submit a 105
discharge request to the secured party. A discharge request shall 106
include good funds in the correct amount to fully discharge the 107
security interest and accurate information concerning the108
watercraft or outboard motor.109

       (3)(a) Upon receiving a discharge request that complies with110
division (D)(2) of this section, except as otherwise provided in111
this division, a secured party shall convey the certificate of112
title, with the discharge of the security interest noted on its113
face, to the dealer within seven business days after the date good114
funds in the correct amount to fully discharge the security115
interest have been credited to an account of the secured party.116

       If a secured party is unable to convey to the dealer a117
certificate of title within the required seven business days, the118
secured party instead shall convey to the dealer an affidavit119
stating that the security interest has been discharged, together120
with payment for a duplicate certificate of title, within that121
period.122

       (b) Conveyance of a certificate of title, or affidavit and123
required payment, from a secured party to a dealer under the124
circumstances described in division (D)(3)(a) of this section125
within the required seven business days may be indicated by a126
postmark within that period.127

       (4) A secured party is liable to a dealer for a late fee of128
ten dollars per day for each certificate of title, or affidavit129
and required payment, conveyed to the dealer more than seven130
business days but less than twenty-one days after the date131
specified in division (D)(3)(a) of this section and, from then on,132
twenty-five dollars per day until the certificate of title, or133
affidavit and required payment, are conveyed to the dealer.134

       (E) IfRegardless of whether a physical certificate of title 135
has not been issued for a watercraft or outboard motor and, when136
all the security interests relating to that watercraft or outboard 137
motor have been discharged, the secured party shall convey to the 138
owner of the watercraft or outboard motor may obtain a physical 139
certificate of title from the clerk of any court of common pleas 140
upon payment of the fee specified in section 1548.10 of the 141
Revised Code, which may be an original or a duplicate certificate 142
of title, with the discharge noted on the certificate.143

       (F) If a clerk of a court of common pleas, other than the144
clerk of the court of common pleas of the county in which the145
owner of a watercraft or outboard motor resides, enters a notation146
of the existence of, or the cancellation of, a security interest147
relating to the watercraft or outboard motor, the clerk shall148
transmit the data relating to the notation to the automated title149
processing system.150

       (G) The electronic transmission of security interest and151
other information under this section shall comply with rules152
adopted by the registrar of motor vehicles under section 4505.13153
of the Revised Code.154

       (H) As used in this section:155

       (1) "Accurate information" means the serial number of the156
watercraft or outboard motor, if any; the make and model of the157
watercraft or outboard motor; and the name and address of the158
owner of the watercraft or outboard motor as they appear on the159
certificate of title that is to be conveyed.160

       (2) "Good funds" has the same meaning as in section 4505.13161
of the Revised Code.162

       (3) "Watercraft dealer" has the same meaning as in section163
1547.01 of the Revised Code.164

       Sec. 4505.13.  (A)(1) Chapter 1309. and section 1701.66 of165
the Revised Code do not permit or require the deposit, filing, or 166
other record of a security interest covering a motor vehicle,167
except as provided in division (A)(2) of this section.168

       (2) Chapter 1309. of the Revised Code applies to a security 169
interest in a motor vehicle held as inventory for sale by a 170
dealer. The security interest has priority over creditors of the 171
dealer as provided in Chapter 1309. of the Revised Code without 172
notation of the security interest on a certificate of title,173
without entry of a notation of the security interest into the 174
automated title processing system if a physical certificate of 175
title for the motor vehicle has not been issued, or without the 176
retention of a manufacturer's or importer's certificate.177

       (B) Subject to division (A) of this section, any security 178
agreement covering a security interest in a motor vehicle, if a 179
notation of the agreement has been made by a clerk of a court of 180
common pleas on the face of the certificate of title or the clerk 181
has entered a notation of the agreement into the automated title 182
processing system and a physical certificate of title for the 183
motor vehicle has not been issued, is valid as against the184
creditors of the debtor, whether armed with process or not, and185
against subsequent purchasers, secured parties, and other 186
lienholders or claimants. All security interests, liens, 187
mortgages, and encumbrances entered into the automated title188
processing system in relation to a particular certificate of 189
title, regardless of whether a physical certificate of title is190
issued, take priority according to the order of time in which they 191
are entered into the automated title processing system by the 192
clerk. Exposure for sale of any motor vehicle by its owner, with 193
the knowledge or with the knowledge and consent of the holder of 194
any security interest, lien, mortgage, or encumbrance on it, does 195
not render that security interest, lien, mortgage, or encumbrance 196
ineffective as against the creditors of that owner, or against 197
holders of subsequent security interests, liens, mortgages, or 198
encumbrances upon that motor vehicle.199

       The secured party, upon presentation of evidence of a 200
security interest to a clerk of a court of common pleas, together 201
with the certificate of title if a physical certificate of title 202
for the motor vehicle exists, and the fee prescribed by section 203
4505.09 of the Revised Code, may have a notation of the security 204
interest made. Unless the secured party specifically requests the 205
clerk not to issue a physical certificate of title and instead to 206
issue an electronic certificate of title, the clerk shall issue, 207
over the clerk's signature and seal of office, a new original 208
certificate of title from the automated title processing records 209
that indicates the security interest and the date of the security 210
interest.211

       If a security interest is fully discharged as a result of its212
holder's receipt of good funds in the correct amount and if the213
holder holds a physical certificate of title, the holder shall214
note the discharge of the security interest on the face of the215
certificate of title over the holder's signature, or over the216
holder's signature on a form prescribed by the registrar of motor 217
vehicles when there is no space for the discharge on the face of 218
the certificate of title. Except as otherwise provided in this 219
section, prior to delivering the certificate of title to the 220
owner, the holder or the holder's agent shall convey the 221
certificate of title or a separate statement of the discharge of 222
the security interest to a clerk. The conveyance shall occur not 223
more than seven business days after the date good funds in the 224
correct amount to fully discharge the security interest have been 225
credited to an account of the holder, provided the holder has been 226
provided accurate information concerning the motor vehicle. 227
Conveyance of the certificate of title or separate statement of 228
the discharge within the required seven business days may be 229
indicated by postmark or receipt by a clerk within that period, 230
or, in the case of a written confirmation that is sent 231
electronically as provided in division (C)(1) of this section, by 232
the date of the electronic mail or other electronic communication. 233
If the discharge of the security interest appears to be genuine, 234
the clerk shall note the cancellation of the security interest on235
the face of the certificate of title, if it was so conveyed, and236
note it in the automated title processing system.237

        If a security interest is fully discharged as a result of its 238
holder's receipt of good funds in the correct amount and the 239
holder does not hold a physical certificate of title, when the 240
holder notifies a clerk of the discharge of its security interest, 241
the holder at that time also may request the clerk to issue a 242
physical certificate of title to the vehicle. The request shall 243
specify whether the clerk is to send the certificate of title 244
directly to the owner or to the holder or the holder's agent for 245
transmission to the owner. If such a request is made, the clerk 246
shall issue a physical certificate of title and send it to the 247
specified person.248

       The clerk shall not honor such a request for a physical 249
certificate of title if it is not made by the holder at the same 250
time as the holder's notification to the clerk of the discharge of 251
its security interest.252

       (C)(1) In all cases, a secured party may choose to present a 253
clerk with evidence of a security interest via written 254
confirmation through electronic means, and the clerk shall enter 255
the security interest into the automated title processing system. 256
A secured party also may choose to notify a clerk of the discharge 257
of its security interest via electronic means, and the clerk shall 258
enter the cancellation into the automated title processing system.259

       (2) In the case of a security interest that is being 260
satisfied by a dealer to whom a certificate of title is being261
transferred, the cancellation of the security interest shall occur 262
during the course of the transfer. The dealer shall submit a 263
discharge request to the secured party. A discharge request shall 264
include good funds in the correct amount to fully discharge the 265
security interest and accurate information concerning the motor 266
vehicle.267

       (3)(a) Upon receiving a discharge request that complies with268
division (C)(2) of this section, if the current automated title 269
processing system record indicates that a physical title exists 270
for that motor vehicle, a secured party shall convey the physical 271
certificate of title, with the discharge of the security interest 272
noted on its face, to the dealer within seven business days after 273
the date good funds in the correct amount to fully discharge the 274
security interest have been credited to an account of the secured275
party.276

       If a secured party is unable to convey to the dealer the 277
physical certificate of title within the required seven business 278
days, the secured party instead shall convey to the dealer an 279
affidavit stating that the security interest has been discharged, 280
together with payment for a duplicate certificate of title, within 281
that period. If the current automated title processing system 282
record for a motor vehicle indicates that an electronic title 283
exists for that motor vehicle, the secured party shall convey to 284
the dealer within the required seven business days written 285
confirmation that the security interest has been satisfied.286

       (b) Conveyance of a physical certificate of title, or 287
affidavit and required payment, or written confirmation that the 288
security interest has been satisfied from a secured party to a 289
dealer under the circumstances described in division (C)(3)(a) of 290
this section within the required seven business days may be291
indicated by a postmark within that period or, in the case of a 292
written confirmation that is sent electronically, the date of the 293
electronic mail or other electronic communication.294

       (4) A secured party is liable to a dealer for a late fee of295
ten dollars per day for each physical certificate of title, or296
affidavit and required payment, or written confirmation that the 297
security interest has been satisfied that is conveyed to the298
dealer more than seven business days but less than twenty-one days 299
after the date specified in division (C)(3)(a) of this section 300
and, from then on, twenty-five dollars per day until the physical 301
certificate of title, or affidavit and required payment, or 302
written confirmation that the security interest has been satisfied 303
is conveyed to the dealer.304

       (D) Notwithstanding any provision of Chapter 1310. of the305
Revised Code or of any other law, the lease of a motor vehicle or 306
trailer does not constitute a conditional sale or create a307
security interest merely because the lease agreement permits or308
requires the lessor, at the end of the lease term, to adjust the309
rental price to either a higher or a lower amount by reference to 310
the amount the lessor realizes upon the sale or other disposition 311
of the motor vehicle or trailer.312

       (E) IfRegardless of whether a physical certificate of title 313
has not been issued for a motor vehicle and, when all the security 314
interests relating to that motor vehicle have been discharged, the 315
secured party shall convey to the owner of the motor vehicle may 316
obtain a physical certificate of title from the clerk of any court 317
of common pleas upon payment of the fee specified in section 318
4505.09 of the Revised Code, which may be an original or a 319
duplicate certificate of title, with the discharge noted on the 320
certificate.321

       (F) If a clerk of a court of common pleas, other than the 322
clerk of the court of common pleas of the county in which the 323
owner of a motor vehicle resides, enters a notation of the 324
existence of, or the cancellation of, a security interest relating 325
to the motor vehicle, the clerk shall transmit the data relating 326
to the notation to the automated title processing system.327

       (G) The registrar of motor vehicles, in accordance with 328
Chapter 119. of the Revised Code, shall adopt rules governing the 329
electronic transmission of security interest and other information 330
under this section. In adopting the rules, the registrar shall 331
confer with the clerks of the courts of common pleas.332

       (H) As used in this section:333

       (1) "Accurate information" means the make and model of the334
motor vehicle, its vehicle identification number, and the name and335
address of its owner as they appear on the certificate of title336
that is to be conveyed.337

       (2) "Dealer" has the same meaning as in section 4517.01 of338
the Revised Code.339

       (3) "Good funds" includes cash, or a wire transfer, cashier's 340
check, certified check, draft, money order, or teller's check 341
issued by an insured financial institution, or a dealer's check 342
for which the secured party has received funds that are available 343
for withdrawal pursuant to "Availability of Funds and Collection 344
of Checks (Regulation CC)," 12 C.F.R. 229.345

       (4) "Inventory" has the same meaning as in section 1309.102346
of the Revised Code.347

       (5) "Electronic certificate of title" means an electronic 348
record stored in the automated title processing system that 349
established ownership of a motor vehicle, as well as any security 350
interest that exists in that motor vehicle.351

       (6) "Written confirmation" means a communication from a 352
secured party to a motor vehicle dealer regarding the secured 353
party's security interest in a motor vehicle. A written 354
confirmation may be either a physical document or an electronic 355
communication such as electronic mail. Both types of written 356
confirmation may be conveyed under this section.357

       Sec. 4519.68.  (A)(1) Chapter 1309. of the Revised Code does 358
not permit or require the deposit, filing, or other record of a 359
security interest covering an off-highway motorcycle or 360
all-purpose vehicle, except as provided in division (A)(2) of this 361
section.362

       (2) Chapter 1309. of the Revised Code applies to a security 363
interest in an off-highway motorcycle or all-purpose vehicle held 364
as inventory, as defined in section 1309.102 of the Revised Code, 365
for sale by a dealer. The security interest has priority over366
creditors of the dealer as provided in Chapter 1309. of the 367
Revised Code without notation of the security interest on a 368
certificate of title, without entry of a notation of the security 369
interest into the automated title processing system if a physical 370
certificate of title has not been issued, or without the retention 371
of a manufacturer's or importer's certificate.372

       (B) Subject to division (A) of this section, any security 373
agreement covering a security interest in an off-highway 374
motorcycle or all-purpose vehicle, if a notation of the agreement 375
has been made by a clerk of a court of common pleas on the face of 376
the certificate of title or if the clerk has entered a notation of 377
the agreement into the automated title processing system if a 378
physical certificate of title has not been issued, is valid as 379
against the creditors of the debtor, whether armed with process or 380
not, and against subsequent purchasers, secured parties, and other 381
lienholders or claimants. All security interests, liens, 382
mortgages, and encumbrances entered into the automated title 383
processing system in relation to a particular certificate of 384
title, regardless of whether a physical certificate of title is 385
issued, take priority according to the order of time in which they 386
are entered into the automated title processing system by the387
clerk. Exposure for sale of any off-highway motorcycle or388
all-purpose vehicle by its owner, with the knowledge or with the389
knowledge and consent of the holder of any security interest,390
lien, mortgage, or encumbrance on it, does not render the security 391
interest, lien, mortgage, or encumbrance ineffective as against 392
the creditors of the owner, or against holders of subsequent 393
security interests, liens, mortgages, or encumbrances upon the 394
off-highway motorcycle or all-purpose vehicle.395

       The secured party, upon presentation of evidence of a 396
security interest to a clerk of a court of common pleas, together 397
with the certificate of title if a physical certificate of title 398
for the off-highway motorcycle or all-purpose vehicle exists, and 399
the fee prescribed by section 4519.59 of the Revised Code, may 400
have a notation of the security interest made. Unless the secured 401
party specifically requests the clerk not to issue a physical 402
certificate of title and instead to issue an electronic 403
certificate of title, the clerk, over the clerk's signature and 404
seal of office, shall issue a new original certificate of title 405
from the automated title processing system that indicates the 406
security interest and the date of the security interest.407

       If a security interest is fully discharged as a result of its408
holder's receipt of good funds in the correct amount and if the409
holder holds a physical certificate of title, the holder shall 410
note the discharge of the security interest over the holder's 411
signature on the face of the certificate of title, or over the 412
holder's signature on a form prescribed by the registrar of motor 413
vehicles when there is no space for the discharge on the face of414
the certificate of title. Except as otherwise provided in this 415
section, prior to delivering the certificate of title to the416
owner, the holder or the holder's agent shall convey the 417
certificate of title or a separate sworn statement of the 418
discharge of the security interest to a clerk. The conveyance 419
shall occur not more than seven business days after the date good 420
funds in the correct amount to discharge fully the security 421
interest have been credited to an account of the holder, provided 422
the holder has been provided accurate information concerning the 423
off-highway motorcycle or all-purpose vehicle. Conveyance of the 424
certificate of title or separate sworn statement of the discharge 425
within the required seven business days may be indicated by 426
postmark or receipt by a clerk within that period. If the 427
discharge of the security interest appears to be genuine, the 428
clerk shall note the cancellation of the security interest on the429
face of the certificate of title, if it was so conveyed, and also 430
shall note it in the automated title processing system.431

       If a security interest is fully discharged as a result of its 432
holder's receipt of good funds in the correct amount and the 433
holder does not hold a physical certificate of title, when the 434
holder notifies a clerk of the discharge of its security interest, 435
the holder at that time also may request the clerk to issue a 436
physical certificate of title to the off-highway motorcycle or 437
all-purpose vehicle. The request shall specify whether the clerk 438
is to send the certificate of title directly to the owner or to 439
the holder or the holder's agent for transmission to the owner. If 440
such a request is made, the clerk shall issue a physical 441
certificate of title and send it to the specified person.442

       The clerk shall not honor such a request for a physical 443
certificate of title if it is not made by the holder at the same 444
time as the holder's notification to the clerk of the discharge of 445
its security interest.446

       (C) In all cases, a secured party may choose to present a447
clerk with evidence of a security interest via electronic means,448
and the clerk shall enter the security interest into the automated449
title processing system. A secured party also may choose to notify 450
a clerk of the discharge of its security interest via electronic 451
means, and the clerk shall enter the cancellation into the 452
automated title processing system.453

        (D) IfRegardless of whether a physical certificate of title 454
has not been issued for an off-highway motorcycle or all-purpose 455
vehicle and, when all the security interests relating to that 456
motorcycle or vehicle have been discharged, the secured party 457
shall convey to the owner of the motorcycle or vehicle may obtain458
a physical certificate of title from the clerk of any court of 459
common pleas upon payment of the fee specified in section 4519.59 460
of the Revised Code, which may be an original or a duplicate 461
certificate of title, with the discharge noted on the certificate.462

       (E) If a clerk of a court of common pleas, other than the 463
clerk of the court of common pleas of the county in which the 464
owner of an off-highway motorcycle or all-purpose vehicle resides, 465
enters a notation of the existence of, or the cancellation of, a 466
security interest relating to the off-highway motorcycle or 467
all-purpose vehicle, the clerk shall transmit the data relating to 468
the notation to the automated title processing system.469

       Section 2. That existing sections 1548.20, 4505.13, and 470
4519.68 of the Revised Code are hereby repealed.471