Section 12 Continued Perfection Upon Application for Missouri Title

• Library: Secured Transactions 2005

It is beyond the scope of this chapter to discuss what circumstances mandate the titling of vehicles in Missouri. For the purpose of assessing perfection of security interests in “certificate of title” jurisdictions, there does not need to be any particular nexus between the vehicle and the titling state, or between the debtor and the titling state. Article 9 provides that the law of a jurisdiction that issues a certificate of title will control, “even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor.” Section 400.9-303(a), RSMo Supp. 2004. “This result comports with most of the reported cases on the subject and with contemporary business practices in the trucking industry.” 20C V.A.M.S. § 400.9-303 cmt. 2 (2003). The rule is not limited to commercial vehicles but will have the most impact with respect to them.

Section 400.9-303(a) is new, as comment 2 confirms. 20C V.A.M.S. § 400.9-303(a) cmt. 2 (2003). Past cases that found significance in a lack of nexus between the issuing state and the debtor or the collateral—e.g., In re Westfall, 227 B.R. 734 (Bankr. W.D. Mo. 1998) (truck was titled in Oklahoma when purchased in Texas by Missouri resident), and In re Maxwell, 89 B.R. 46 (Bankr. W.D. Mo. 1988) (truck was titled in Iowa to avoid Missouri sales tax when truck was purchased in Missouri by one Missouri resident from another)—will no longer be relevant with respect to questions involving out-of-state vehicle titles.

What happens to out-of-state perfection when a borrower applies for a Missouri title? Essentially, the perfection of the first state is recognized as continuing under § 400.9-311, RSMo Supp. 2004, but with limitations and reservations. As will be seen, these limitations are sufficient to induce a lender to take action to protect itself in order to continue its perfected status...