HB-5668, As Passed House, July 18, 2012

SUBSTITUTE FOR

HOUSE BILL NO. 5668

A bill to amend 1949 PA 300, entitled

"Michigan vehicle code,"

by amending sections 217 and 235 (MCL 257.217 and 257.235), section

217 as amended by 2005 PA 36 and section 235 as amended by 2002 PA

652, and by adding section 235b.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 217. (1) An owner of a vehicle that is subject to

registration under this act shall apply to the secretary of state,

upon an appropriate form furnished by the secretary of state, for

the registration of the vehicle and issuance of a certificate of

title for the vehicle. A vehicle brought into this state from

another state or jurisdiction that has a rebuilt, salvage, scrap,

flood, or comparable certificate of title issued by that other

state or jurisdiction shall be issued a rebuilt, salvage, scrap, or

flood certificate of title by the secretary of state. The

application shall be accompanied by the required fee. An

application for a certificate of title shall bear the signature or

verification and certification of the owner. The application shall

contain all of the following:

(a) The owner's name, the owner's bona fide residence, and

either of the following:

(i) If the owner is an individual, the owner's mailing address.

(ii) If the owner is a firm, association, partnership, limited

liability company, or corporation, the owner's business address.

(b) A description of the vehicle including the make or name,

style of body, and model year; the number of miles, not including

the tenths of a mile, registered on the vehicle's odometer at the

time of transfer; whether the vehicle is a flood vehicle or another

state previously issued the vehicle a flood certificate of title;

whether the vehicle is to be or has been used as a taxi or police

vehicle, or by a political subdivision of this state, unless the

vehicle is owned by a dealer and loaned or leased to a political

subdivision of this state for use as a driver education vehicle;

whether the vehicle has previously been issued a salvage or rebuilt

certificate of title from this state or a comparable certificate of

title from any other state or jurisdiction; vehicle identification

number; and the vehicle's weight fully equipped, if a passenger

vehicle registered in accordance with section 801(1)(a), and, if a

trailer coach or pickup camper, in addition to the weight, the

manufacturer's serial number, or in the absence of the serial

number, a number assigned by the secretary of state. A number

assigned by the secretary of state shall be permanently placed on

the trailer coach or pickup camper in the manner and place

designated by the secretary of state.

addresses of the holders of security interests in the vehicle and

in an accessory to the vehicle, in the order of their priority.

(d) Further information that the secretary of state reasonably

requires to enable the secretary of state to determine whether the

vehicle is lawfully entitled to registration and the owner entitled

to a certificate of title. If the secretary of state is not

satisfied as to the ownership of a late model vehicle or other

vehicle having a value over $2,500.00, before registering the

vehicle and issuing a certificate of title, the secretary of state

may require the applicant to file a properly executed surety bond

in a form prescribed by the secretary of state and executed by the

applicant and a company authorized to conduct a surety business in

this state. The bond shall be in an amount equal to twice the value

of the vehicle as determined by the secretary of state and shall be

conditioned to indemnify or reimburse the secretary of state, any

prior owner, and any subsequent purchaser or lessee of the vehicle

and their successors in interest against any expense, loss, or

damage, including reasonable attorney's fees, by reason of the

issuance of a certificate of title for the vehicle or on account of

any defect in the right, title, or interest of the applicant in the

vehicle. An interested person has a right of action to recover on

the bond for a breach of the conditions of the bond, but the

aggregate liability of the surety to all persons shall not exceed

the amount of the bond. The bond shall be returned at the end of 3

years, or before 3 years if the vehicle is no longer registered in

this state and the currently valid certificate of title is

surrendered to the secretary of state, unless the secretary of

state has received notification of the pendency of an action to

recover on the bond. If the secretary of state is not satisfied as

to the ownership of a vehicle that is valued at $2,500.00 or less

and that is not a late model vehicle, the secretary of state shall

require the applicant to certify that the applicant is the owner of

the vehicle and entitled to register and title the vehicle.

(e) Except as provided in subdivision (f), an application for

a commercial vehicle shall also have attached a scale weight

receipt of the motor vehicle fully equipped as of the time the

application is made. A scale weight receipt is not necessary if

there is presented with the application a registration receipt of

the previous year that shows on its face the empty weight of the

motor vehicle as registered with the secretary of state that is

accompanied by a statement of the applicant that there has not been

structural change in the motor vehicle that has increased the empty

weight and that the previous registered weight is the true weight.

(f) An application for registration of a vehicle on the basis

of elected gross weight shall include a declaration by the

applicant specifying the elected gross weight for which application

is being made.

(g) If the application is for a certificate of title of a

motor vehicle registered in accordance with section 801(1)(p), the

application shall include the manufacturer's suggested base list

price for the model year of the vehicle. Annually, the secretary of

state shall publish a list of the manufacturer's suggested base

list price for each vehicle being manufactured. Once a base list

price is published by the secretary of state for a model year for a

vehicle, the base list price shall not be affected by subsequent

increases in the manufacturer's suggested base list price but shall

remain the same throughout the model year unless changed in the

annual list published by the secretary of state. If the secretary

of state's list has not been published for that vehicle by the time

of the application for registration, the base list price shall be

the manufacturer's suggested retail price as shown on the label

required to be affixed to the vehicle under 15 USC 1232. If the

manufacturer's suggested retail price is unavailable, the

application shall list the purchase price of the vehicle as defined

in section 801.

(2) An applicant for registration of a leased pickup truck or

passenger vehicle that is subject to registration under this act,

except a vehicle that is subject to a registration fee under

section 801g, shall disclose in writing to the secretary of state

the lessee's name, the lessee's bona fide residence, and either of

the following:

(a) If the lessee is an individual, the lessee's Michigan

driver license number or Michigan personal identification number

or, if the lessee does not have a Michigan driver license or

Michigan personal identification number, the lessee's mailing

address.

(b) If the lessee is a firm, association, partnership, limited

liability company, or corporation, the lessee's business address.

(3) The secretary of state shall maintain the information

described in subsection (2) on the secretary of state's computer

records.

(4) Except as provided in subsection (5), a dealer selling,

leasing, or exchanging vehicles required to be titled, within 15

days after delivering a vehicle to the purchaser or lessee, and a

person engaged in the sale of vessels required to be numbered by

part 801 of the natural resources and environmental protection act,

1994 PA 451, MCL 324.80101 to 324.80199, within 15 days after

delivering a boat trailer weighing less than 2,500 pounds to the

purchaser or lessee, shall apply to the secretary of state for a

new title, if required, and transfer or secure registration plates

and secure a certificate of registration for the vehicle or boat

trailer, in the name of the purchaser or lessee. The dealer's

license may be suspended or revoked in accordance with section 249

for failure to apply for a title when required or for failure to

transfer or secure registration plates and certificate of

registration within the 15 days required by this section. If the

dealer or person fails to apply for a title when required, and to

transfer or secure registration plates and secure a certificate of

registration and pay the required fees within 15 days of delivery

of the vehicle or boat trailer, a title and registration for the

vehicle or boat trailer may subsequently be acquired only upon the

payment of a late transfer fee of $15.00 for an individual or a

dealer other than a dealer subject to section 235b in addition to

the fees specified in section 806. For a used or secondhand vehicle

dealer subject to section 235b, the late transfer fee is $100.00 in

addition to the fees specified in section 806. The purchaser or

lessee of the vehicle or the purchaser of the boat trailer shall

sign the application, including, ~~when~~ if applicable, the

declaration specifying the maximum elected gross weight , as

required by subsection (1)(f), and other necessary papers to enable

the dealer or person to secure the title, registration plates, and

transfers from the secretary of state. If the secretary of state

mails or delivers a purchaser's certificate of title to a dealer,

the dealer shall mail or deliver the certificate of title to the

purchaser not more than 5 days after receiving the certificate of

title from the secretary of state.

(5) A dealer selling or exchanging an off lease or buy back

vehicle shall apply to the secretary of state for a new title for

the vehicle within 15 days after it receives the certificate of

title from the lessor or manufacturer under section 235 or section

235b and transfer or secure registration plates and secure a

certificate of registration for the vehicle in the name of the

purchaser. The dealer's license may be suspended or revoked in

accordance with section 249 for failure to apply for a title when

required or for failure to transfer or secure registration plates

and certificate of registration within the 15-day period. If the

dealer or person fails to apply for a title when required, and to

transfer or secure registration plates and secure a certificate of

registration and pay the required fees within the 15-day time

period, a title and registration for the vehicle may subsequently

be acquired only upon the payment of a late transfer fee of $15.00

for an individual or dealer other than a used or secondhand vehicle

dealer subject to section 235b in addition to the fees specified in

section 806. The late transfer fee for a used or secondhand vehicle

dealer subject to section 235b is $100.00 in addition to the fees

specified in section 806. The purchaser of the vehicle shall sign

the application, including, ~~when~~ if applicable, the declaration

specifying the maximum elected gross weight , as required by

subsection (1)(f), and other necessary papers to enable the dealer

or person to secure the title, registration plates, and transfers

from the secretary of state. If the secretary of state mails or

delivers a purchaser's certificate of title to a dealer, the dealer

shall mail or deliver the certificate of title to the purchaser not

more than 5 days after receiving the certificate of title from the

secretary of state.

(6) If a vehicle is delivered to a purchaser or lessee who has

valid Michigan registration plates that are to be transferred to

the vehicle, and an application for title, if required, and

registration for the vehicle is not made before delivery of the

vehicle to the purchaser or lessee, the registration plates shall

be affixed to the vehicle immediately, and the dealer shall provide

the purchaser or lessee with an instrument in writing, on a form

prescribed by the secretary of state, which shall serve as a

temporary registration for the vehicle for a period of 15 days from

the date the vehicle is delivered.

(7) An application for a certificate of title that indicates

the existence of a security interest in the vehicle or in an

accessory to the vehicle, if requested by the security interest

holder, shall be accompanied by a copy of the security agreement

~~which~~ that need not be signed. The request may be made of the

seller on an annual basis. The secretary of state shall indicate on

the copy the date and place of filing of the application and return

the copy to the person submitting the application who shall forward

it to the holder of the security interest named in the application.

(8) If the seller does not prepare the credit information,

contract note, and mortgage, and the holder, finance company,

credit union, or banking institution requires the installment

seller to record the lien on the title, the holder, finance

company, credit union, or banking institution shall pay the seller

a service fee of not more than $10.00. The service fee shall be

paid from the finance charges and shall not be charged to the buyer

in addition to the finance charges. The holder, finance company,

credit union, or banking institution shall issue its check or bank

draft for the principal amount financed, payable jointly to the

buyer and seller, and there shall be imprinted on the back side of

the check or bank draft the following:

"Under Michigan law, the seller must record a first lien in

favor of (name of lender) _______________ on the vehicle with

vehicle identification number _______________ and title the vehicle

only in the name(s) shown on the reverse side." On the front of the

sales check or draft, the holder, finance company, credit union, or

banking institution shall note the name(s) of the prospective

owner(s). Failure of the holder, finance company, credit union, or

banking institution to comply with these requirements frees the

seller from any obligation to record the lien or from any liability

that may arise as a result of the failure to record the lien. A

service fee shall not be charged to the buyer.

(9) In the absence of actual malice proved independently and

not inferred from lack of probable cause, a person who in any

manner causes a prosecution for larceny of a motor vehicle; for

embezzlement of a motor vehicle; for any crime an element of which

is the taking of a motor vehicle without authority; or for buying,

receiving, possessing, leasing, or aiding in the concealment of a

stolen, embezzled, or converted motor vehicle knowing that the

motor vehicle has been stolen, embezzled, or converted, is not

liable for damages in a civil action for causing the prosecution.

This subsection does not relieve a person from proving any other

element necessary to sustain his or her cause of action.

(10) Receipt by the secretary of state of a properly tendered

application for a certificate of title on which a security interest

in a vehicle is to be indicated is a condition of perfection of a

security interest in the vehicle and is equivalent to filing a

financing statement under the uniform commercial code, 1962 PA 174,

MCL 440.1101 to 440.11102, with respect to the vehicle. When a

security interest in a vehicle is perfected, it has priority over

the rights of a lien creditor as lien creditor is defined in

section 9102 of the uniform commercial code, 1962 PA 174, MCL

440.9102.

Sec. 235. (1) If the transferee of a vehicle is a new motor

vehicle dealer or a used or secondhand vehicle dealer that acquires

the vehicle for resale, the dealer is not required to obtain a new

registration of the vehicle or forward the certificate of title to

the secretary of state, but shall retain and have in the dealer's

immediate possession the assigned certificate of title with the

odometer information properly completed, except as otherwise

provided in section 235b. A dealer shall obtain a certificate of

title for a vehicle having a salvage certificate of title before

the dealer may operate the vehicle under dealer's license plates.

Upon transferring title or interest to another person that is not a

dealer, the dealer shall complete an assignment and warranty of

title upon the certificate of title, salvage certificate of title,

or dealer reassignment of title form and make an application for

registration and a new title as provided in section 217(4).

(2) The dealer or transferee is liable for all damages arising

from the operation of the vehicle while the vehicle is in the

dealer's or transferee's possession.

(3) Upon transferring title or interest to another dealer, the

dealer shall complete an assignment and warranty of title upon the

certificate of title, salvage certificate of title, or dealer

reassignment of title form and deliver it to the licensed dealer to

which the transfer is made.

(4) The secretary of state shall prescribe the dealer

reassignment of title form. The form shall contain the title number

of the accompanying title; the name, address, and, if applicable,

dealer license number of the transferee; the year, make, model,

body type, and vehicle identification number of the vehicle; the

name, address, dealer number, and signature of the transferor; an

odometer mileage statement ~~pursuant to~~ as prescribed under section

233a; and any other information the secretary of state requires.

(5) This section does not prohibit a dealer from selling a buy

back vehicle while the certificate of title is in the possession of

a manufacturer that obtained the certificate of title under the

manufacturer's buy back vehicle program. The manufacturer shall

mail the certificate of title to the dealer within 5 business days

after the manufacturer's receipt of a signed statement from the

purchaser of the vehicle acknowledging he or she was informed by

the dealer that the manufacturer acquired title to the vehicle as

the result of an arbitration proceeding, ~~pursuant to~~ under a

customer satisfaction policy adopted by the manufacturer, or under

1986 PA 87, MCL 257.1401 to 257.1410, or a similar law of another

state.

(6) This section does not prohibit a dealer from selling an

off lease vehicle while the certificate of title is in the

possession of a lessor. The lessor shall mail the certificate of

title to the dealer within 21 days after the lessor receives the

purchase price of the vehicle and any other fees and charges due

under the lease.

Sec. 235b. (1) A used or secondhand vehicle dealer may

voluntarily enter into a written agreement with an inventory lender

allowing the inventory lender to retain in its possession the

certificate of title for a vehicle that is subject to an inventory

loan if all of the following conditions have been met:

(a) The used or secondhand vehicle dealer posts a notice on

the used or secondhand vehicle window disclosing the existence of

the used or secondhand vehicle dealer's inventory loan for the

vehicle. The notice under this subdivision shall include the name,

address, telephone number, and internet address of the used or

secondhand vehicle inventory lender in a manner and of a size

sufficient to alert potential buyers of the existence of inventory

loan, contact information for the holder of that inventory loan,

and that the inventory lender holds the title to the vehicle in its

possession. The notice under this subdivision shall be in a form

and manner as prescribed by the secretary of state.

(b) The used or secondhand vehicle dealer maintains a color

copy of the certificate of title, either in paper or electronic

form, at the used or secondhand vehicle dealer's place of business.

The color copy of the certificate of title shall indicate on its

face that it is a copy. The color copy of the title and a

disclosure or notice of the vehicle inventory lender's possession

of the title shall be presented to the buyer at the time of

purchase in paper or electronic form.

electronic copy of the inventory loan agreement between the used or

secondhand vehicle dealer and the vehicle inventory lender, along

with the inventory list, which shall be not more than 5 days old.

These documents shall be made available to the secretary of state

upon the request of the secretary of state.

(2) A used or secondhand vehicle dealer's inventory lender

shall release the certificate of title to the used or secondhand

vehicle dealer, the used or secondhand vehicle dealer's designee,

or the secretary of state, as applicable, not more than 2 banking

business days after the used or secondhand vehicle dealer's

inventory lender receives 1 of the following:

(a) The outstanding principal balance and any other fees and

charges due on the vehicle under the inventory loan.

(b) A written request from the used or secondhand vehicle

dealer with proof of full payment evidencing that the vehicle has

been sold to a buyer in the ordinary course of business under

section 9320 of the uniform commercial code, 1962 PA 174, MCL

440.9320, or a substantially similar law of another state.

payment evidencing that the purchaser's status as a buyer in

ordinary course of business under section 9320 of the uniform

commercial code, 1962 PA 174, MCL 440.9320, or a substantially

similar law of another state.

(d) A written request from the secretary of state.

(3) A used or secondhand vehicle dealer's inventory lender

that fails to release a vehicle title as required under subsection

(2) may be ordered to pay an administrative fine of $500.00.

(4) A used or secondhand vehicle inventory lender that holds a

certificate of title for a vehicle shall register with the

secretary of state in a form and manner as prescribed by the

secretary of state to provide its location and contact information.

No fee shall be charged for registration under this subsection.

(5) This section applies only to dealers licensed under this

act that solely sell used or secondhand vehicles and does not apply

to a dealer licensed under this act that sells new motor vehicles

or both new motor vehicles and used or secondhand vehicles.

(6) Section 235 applies to used or secondhand vehicle dealers

under this section only to the extent that section 235 does not

conflict with this section.

(7) As used in this section:

(a) "Inventory lender" means a third party engaged in the

business of providing financing to a used or secondhand vehicle

dealer for the acquisition or retention of vehicles that are held

for sale or lease by the used or secondhand vehicle dealer in the

ordinary course of the used or secondhand vehicle dealer's business

and has filed a financing statement with the secretary of state

evidencing the third party's security interest in the used or

secondhand vehicle dealer's inventory and the proceeds of that

inventory.

(b) "License" means pertinent license under section 248.