(1) If the interest of the owner in a mobile home is terminated by the enforcement of a security agreement, the transferee of the owner's interest shall promptly mail or deliver to the department the last certificate of title, if the transferee has possession of it, an application for a new certificate in the form prescribed by the department, and an affidavit made by or on behalf of the holder of the security interest so enforced that the mobile home was repossessed, that the interest of the owner was lawfully terminated by enforcement of the security agreement, and whether the holder has delivered the last certificate of title to the transferee of the owner's interest, naming the transferee, or if not, the reason delivery was not made and the then location of the certificate of title so far as known to the holder. If the holder of the security interest succeeds to the interest of the owner and holds the mobile home for resale, the holder shall not be required to secure a new certificate of title but, upon transfer to another person, shall promptly mail or deliver to the transferee or to the department the certificate, if in the holder's possession, the affidavit, and other documents required to be sent to the department by the transferee.

    (2) If the interest of the owner in a mobile home is terminated by sale pursuant to a levy of execution, attachment, or other process of a court, the transferee of the owner's interest shall promptly mail or deliver to the department the last certificate of title, if the transferee has possession of it, an application for a new certificate of title in the form prescribed by the department and an affidavit, upon a form prescribed by the department, made by the officer of the court who conducted the sale, setting forth the date of the sale, and the name of the purchaser and whether the officer has delivered the certificate of title to the purchaser and if not, the reason delivery was not made and the then location of the certificate of title so far as known to the officer.

    (3) A person holding a certificate of title where the interest of the owner named in the certificate has been terminated in the manner provided by subsection (1) or (2) shall mail or deliver the certificate to the department upon its request. The delivery of the certificate pursuant to the request of the department does not affect the rights of the person surrendering the certificate, and the action of the department in issuing a new certificate of title is not conclusive upon any rights of an owner or holder of a security interest named in the old certificate.

    (4) The department, upon receipt of an application for a new certificate of title by a transferee in the manner provided by subsection (1) or (2), with proof of the transfer, the required fee, and any other documents required by law, shall issue a new certificate of title in the name of the transferee as owner, setting forth all security interests noted on the last certificate of title as having priority over the security agreement so enforced and shall mail or deliver the new certificate to the owner. If the outstanding certificate of title is not delivered, the department shall make demand for the outstanding certificate of title from the holder.