Section 10 Continued Perfection of Lien Originally Perfected Under Certificate of Title Statute

• Library: Secured Transactions 2005

If a lender perfects its security interest according to a “certificate of title” law that satisfies the Article 9 definition, it may not be necessary for a lender to do anything to protect its lien in Missouri until its borrower applies for a Missouri certificate of title. It is not necessarily a geographical move into another state, such as a company moving its headquarters into Missouri or moving its fleet of delivery vehicles into Missouri, that triggers the need for the lender to take further actions under Article 9. What limits the continuing perfection of security interests is the borrower’s act of applying for a title in a new jurisdiction. If the borrower can and does avoid re-titling its vehicles in a new jurisdiction,

the lender does not have to do anything to keep its lien perfected.

How is this conclusion reached? See § 400.9-311, RSMo Supp. 2004. The reader may note the rule that, during any period in which a motor vehicle serves as inventory, the special rules governing motor vehicles do not apply, and the ordinary Article 9 rules that apply to inventory will govern instead. Section 400.9-311(d).

For vehicle collateral other than inventory, § 400.9-311(a)(3) recognizes perfection of a lien in another jurisdiction in accordance with a law that provides for notation of the lien on a certificate of title “as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor.” (The quoted language is redundant given the definition of...