HB-6486, As Passed Senate, December 18, 2018

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 6486

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1994 PA 451, entitled

 

"Natural resources and environmental protection act,"

 

by amending sections 80304, 80305, 80307, 80309, 80314, 80319,

 

80320, and 80321 (MCL 324.80304, 324.80305, 324.80307, 324.80309,

 

324.80314, 324.80319, 324.80320, and 324.80321), sections 80304,

 

80305, 80314, 80319, and 80321 as added by 1995 PA 58, sections

 

80307 and 80309 as amended by 2005 PA 271, and section 80320 as

 

amended by 2005 PA 37, and by adding section 80315f.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 80304. (1) A person, Subject to section 80320(4), and

 

except as provided in section 80306, a person shall not sell or

 

otherwise dispose of a watercraft without delivering to the

 

purchaser or transferee of the watercraft a certificate of title

 

with such assignment on the certificate of title as is necessary to

show title in the purchaser.

 

     (2) A Subject to 80320(4), a person shall not purchase or

 

otherwise acquire a watercraft without obtaining a certificate of

 

title for it in the person's name pursuant to this part.

 

     Sec. 80305. (1) A Subject to section 80320(4), a person

 

acquiring a watercraft from the owner of the watercraft, whether

 

the owner is a manufacturer, importer, dealer, or otherwise, shall

 

not acquire any right, title, claim, or interest in or to the

 

watercraft until that person has issued to him or her a certificate

 

of title to the watercraft, or delivered a manufacturer's or

 

importer's certificate for the watercraft. A waiver or estoppel

 

shall not operate in favor of that person against a person having

 

possession of the certificate of title, or manufacturer's or

 

importer's certificate for the watercraft, for a valuable

 

consideration.

 

     (2) A court shall not recognize the right, title, claim, or

 

interest of a person in or to a watercraft sold or disposed of, or

 

mortgaged or encumbered, unless the right, title, claim, or

 

interest is 1 of the following:

 

     (a) Evidenced Subject to section 80320(4), evidenced by a

 

certificate of title or a manufacturer's or importer's certificate

 

issued pursuant to this part.

 

     (b) Evidenced by admission in the pleadings or stipulation of

 

the parties.

 

     Sec. 80307. (1) Application An application for a certificate

 

of title for a watercraft shall be made upon on a form prescribed

 

by the secretary of state. The application shall be filed with the

secretary of state within 15 days after the date of purchase or

 

transfer. At the request of the applicant, an application shall be

 

processed on an expedited basis. The application shall be

 

accompanied by the fee or fees prescribed in section 80311, and if

 

a certificate of title was previously issued for the watercraft, it

 

shall be accompanied by the certificate of title duly assigned,

 

unless otherwise provided in this part. Unless otherwise provided

 

in this part, if a certificate of title was not previously issued

 

for the watercraft in this state, the application shall be

 

accompanied by a manufacturer's or importer's certificate, by a

 

certificate of ownership, or a certificate of number issued under

 

part 801 or former 1967 PA 303, if purchased by the applicant on or

 

before July 1, 1976, or by a certificate of title, bill of sale, or

 

other evidence of ownership required by the law of another state

 

from which the watercraft is brought into this state. Evidence of

 

ownership of a watercraft for which a Michigan certificate of title

 

was not previously issued, and which that does not have permanently

 

affixed to it a hull identification number, shall be accompanied by

 

the certificate of hull identification number assigned by the

 

secretary of state as provided in section 80308. The secretary of

 

state shall retain the evidence of title presented by the applicant

 

and upon which the certificate of title is issued, and shall use

 

reasonable diligence in ascertaining whether the facts in the

 

application are true by checking the application and documents

 

accompanying the application with the secretary of state's records

 

of watercraft. in the secretary of state's office. If Subject to

 

section 80320(4), if satisfied that the applicant is the owner of

the watercraft and that the application is in the proper form, the

 

secretary of state shall issue a certificate of title.

 

     (2) If the secretary of state is not satisfied as to the

 

ownership of a watercraft having a value of more than $2,500.00,

 

before registering the watercraft 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 watercraft 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 and their successors in interest against any

 

expense, loss, or damage, including reasonable attorney fees,

 

incurred as a result of the issuance of a certificate of title for

 

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

 

the applicant in the watercraft. 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 watercraft 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 watercraft that is worth

 

$2,500.00 or less, the secretary of state shall require the

applicant to certify that the applicant is the owner of the

 

watercraft and entitled to register and title the watercraft.

 

     (3) When Subject to section 80320(4), when a watercraft is

 

sold by a dealer to a general purchaser or user, the certificate of

 

title shall be obtained in the name of the purchaser by the dealer

 

upon application signed by the purchaser. In other cases, the

 

certificate shall be obtained by the purchaser.

 

     Sec. 80309. (1) The secretary of state may refuse to issue a

 

watercraft certificate of title under the circumstances provided in

 

section 80320(4).

 

     (2) Subject to subsection (1), the secretary of state shall

 

issue a certificate of title containing the information required in

 

the application for a certificate of title, as prescribed by

 

section 80308, except for the name and address of the previous

 

owner. The certificate of title shall also contain space for the

 

notation and cancellation of a lien, mortgage, or encumbrance. An

 

assignment of certificate of title shall appear on the certificate

 

of title in the form to be prescribed by the secretary of state.

 

The assignment form shall include a warranty that the signer is the

 

owner of the watercraft and that a mortgage, lien, or encumbrance

 

is not on the watercraft, except as noted on the face of the

 

certificate of title.

 

     Sec. 80314. (1) If a certificate of title is lost, mutilated,

 

or becomes illegible, the person to whom that certificate of title

 

was issued shall may apply to the secretary of state for a

 

duplicate copy of the certificate of title upon a form prescribed

 

by the secretary of state and accompanied by the fee prescribed by

section 80311. The applicant shall certify the application. Upon an

 

applicant's compliance with this section, the secretary of state

 

shall issue to that applicant a duplicate copy of the certificate

 

of title that contains the legend, "This is a duplicate certificate

 

and may be subject to the rights of a person under the original

 

certificate.". As provided under section 80320(4), the department

 

of state is not required to issue a duplicate certificate of title

 

to the owner of a watercraft if the title is subject to a security

 

interest. A purchaser of watercraft who obtains title to the

 

watercraft through a duplicate copy of the watercraft's certificate

 

of title acquires only those rights in the watercraft that the

 

holder of the duplicate certificate of title had. At the time of

 

purchase, a watercraft purchaser may require the seller to

 

indemnify the purchaser and subsequent purchasers of the watercraft

 

against a losss which loss that the purchaser or subsequent

 

purchasers may suffer by reason of a claim presented upon the

 

original certificate of title. If the original certificate of title

 

is recovered by the owner, the owner shall immediately surrender it

 

to the secretary of state for cancellation.

 

     (2) The secretary of state is not required to issue a

 

duplicate of a lost watercraft certificate of title at the time

 

when ownership of the watercraft is being transferred if all of the

 

following conditions are met:

 

     (a) The transferor personally appears before an authorized

 

representative of the secretary of state and does all of the

 

following:

 

     (i) Provides evidence of the transferor's identity and

ownership interest in the watercraft that is satisfactory to the

 

authorized representative of the secretary of state.

 

     (ii) Pays the fee required under section 80311.

 

     (b) The transferee or the transferee's representative

 

accompanies the transferor in appearing before the authorized agent

 

of the secretary of state and does all of the following:

 

     (i) Applies for an original certificate of title for the

 

watercraft.

 

     (ii) Provides evidence of the transferee's identity that is

 

satisfactory to the authorized representative of the secretary of

 

state.

 

     (iii) Pays the fee required under section 80311.

 

     (3) If a duplicate certificate of title is not required for

 

the transfer of a watercraft under subsection (2), the secretary of

 

state shall maintain a record specifying that ownership of the

 

watercraft was transferred without a surrender of the watercraft's

 

certificate of title.

 

     (4) As used in this section, "transfer" or "transferred"

 

includes a conveyance, assignment, and gift.

 

     Sec. 80315f. (1) The secretary of state may enter into 1 or

 

more contracts under this section to establish, implement, and

 

operate an electronic lien title system to process the notification

 

and release of security interests in watercraft through electronic

 

file transfers, or as otherwise determined by the secretary of

 

state, in lieu of the issuance and maintenance of paper documents

 

otherwise required by law. Any such contract shall require the

 

protection of proprietary information in the electronic lien title

system and provide for the protection of a competitive free market.

 

     (2) Except for persons who are not normally engaged in the

 

business or practice of financing watercraft, all secured parties

 

are required to participate in the electronic lien title system.

 

     (3) For the purposes of this part, any requirement that a

 

security interest or other information appear on a certificate of

 

title is satisfied by the inclusion of that information in an

 

electronic file maintained in an electronic lien title system. The

 

satisfaction of a security interest may be electronically

 

transmitted to the secretary of state. A secured party shall

 

execute a release of its security interest in a watercraft in a

 

manner prescribed by the department not more than 14 days after the

 

secured party receives the payment in satisfaction of the security

 

interest. If the certificate of title is in the possession of the

 

watercraft owner, the secured party shall deliver the release to

 

the watercraft owner or as otherwise directed by the owner.

 

However, if the certificate of title is held electronically as

 

provided under section 80320(4), the secured party shall deliver

 

the release of security interest to the department of state, and

 

the department of state shall cancel the security interest. If the

 

secured party fails to comply with these requirements for the

 

release of a secured interest, the secured party is liable to the

 

watercraft owner for all damages sustained by the owner because of

 

the failure to comply. The electronic lien title system shall

 

provide a mechanism by which a watercraft dealer may assign

 

ownership of a watercraft without proof that the prior security

 

interest was satisfied existing on the electronic lien title

system. However, in the event of such an assignment, the dealer

 

warrants that the title is free and clear of all liens and assumes

 

responsibility for the satisfaction of the security interest.

 

     (4) A certified copy of the secretary of state's electronic

 

record of a security interest is admissible in any civil, criminal,

 

or administrative proceeding in this state as evidence of the

 

existence of the security interest. If a certificate of title is

 

maintained in the electronic lien title system, a certified copy of

 

the secretary of state's electronic record of the certificate of

 

title is admissible in any civil, criminal, or administrative

 

proceeding in this state as evidence of the existence and contents

 

of the certificate of title.

 

     (5) The secretary of state may determine any requirements

 

necessary to carry out this section, including, but not limited to,

 

1 or more of the following:

 

     (a) Monitoring the reasonable fees charged by service

 

providers or a contractor for the establishment and maintenance of

 

the electronic lien title system.

 

     (b) The qualifications of service providers for participation

 

in the electronic lien title system.

 

     (c) The qualifications for a contractor to enter into a

 

contract with the secretary of state to establish, implement, and

 

operate the electronic lien title system.

 

     (d) Program specifications that a contractor must adhere to in

 

establishing, implementing, and operating the electronic lien title

 

system.

 

     (6) The electronic lien title system under this section shall

be established, implemented, and operational by February 16, 2021.

 

     (7) By February 16, 2021, the department shall require a

 

person to enter evidence of security interests and any related

 

information into the electronic lien title system in lieu of paper

 

documents.

 

     (8) As used in this section:

 

     (a) "Contractor" means a person who enters into a contract

 

with the secretary of state to establish, implement, and operate

 

the electronic lien title system described in this section.

 

     (b) "Electronic lien title system" means a system to process

 

the notification and release of security interests through

 

electronic file transfers that is established and implemented under

 

this section.

 

     (c) "Service provider" means a person who provides secured

 

parties with software to manage electronic lien and title data as

 

provided under this section.

 

     Sec. 80319. (1) A person shall not do any of the following:

 

     (a) Alter or Reproduce, alter, counterfeit, forge, or

 

duplicate a certificate of title, or a manufacturer's or importer's

 

certificate, to a watercraft, an assignment of either, or a

 

cancellation of a lien on a watercraft.

 

     (b) Hold Hold or use a certificate, assignment, or

 

cancellation knowing it is altered or reproduced, altered,

 

counterfeited, forged, or duplicated.

 

     (c) Procure Procure or attempt to procure a certificate of

 

title to a watercraft, or pass or attempt to pass a certificate of

 

title or an assignment of title to a watercraft, knowing or having

reason to believe that the watercraft is stolen.

 

     (d) Sell or offer for sale in this state a watercraft on which

 

the manufacturer's or assigned hull identification number is

 

destroyed, removed, covered, altered, or defaced, with knowledge of

 

the destruction, removal, covering, alteration, or defacement of

 

the manufacturer's or assigned hull identification number.

 

     (e) Use a false or fictitious name, give a false or fictitious

 

address, or make a false statement in an application or certificate

 

required under this part, or in a bill of sale or sworn statement

 

of ownership, or otherwise commit a fraud in an application.

 

     (f) Fraudulently indicate on a certificate of title that there

 

is no security interest on record for a watercraft.

 

     (g) Forge or counterfeit a letter, receipt, or other document

 

from the holder of a security interest in a watercraft indicating

 

that the security interest has been released.

 

     (h) (f) Sell or transfer a watercraft without delivering to

 

the purchaser or transferee of the watercraft a certificate of

 

title, or a manufacturer's or importer's certificate to the

 

watercraft, assigned to the purchaser as provided for in this part.

 

     (2) A person who violates this section is guilty of a

 

misdemeanor, punishable by imprisonment for not more than 1 year,

 

or a fine of not more than $5,000.00, or both.

 

     (3) A person who is convicted of a violation of subsection

 

(1)(f) or (g), in addition to any other penalty, shall pay

 

restitution to the holder of a security interest in the watercraft

 

in the amount of the outstanding lien on the watercraft.

 

     Sec. 80320. (1) A party with a secured interest in a

watercraft, upon presentation of a properly completed application

 

for certificate of title to the secretary of state, together with

 

the fee prescribed by section 80311, may have a notation of the

 

security interest made on the face of the certificate of title to

 

be issued by the secretary of state. The secretary of state shall

 

enter the notation and the date and shall note the security

 

interest and the date in his or her files. However, as provided in

 

subsection (5), the secretary of state is not required to issue a

 

certificate of title to the owner of a vehicle if the title is

 

subject to a security interest.

 

     (2) When the security interest is discharged, the holder shall

 

note the discharge on the certificate of title over his or her

 

signature.

 

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

 

application for a certificate of title on which a security interest

 

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

 

a security interest in the watercraft, unless, under subsection

 

(4), the department of state does not issue certificates of title

 

for watercraft subject to a security interest, and is equivalent to

 

filing a financing statement under the uniform commercial code,

 

1962 PA 174, MCL 440.1101 to 440.11102, 440.9994, with respect to

 

the watercraft. When a security interest in a watercraft 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.

 

     (4) The department of state may require that all transactions

 

concerning watercraft title liens and security interests be

conducted by electronic means, as determined by the department of

 

state. In that case, if a watercraft is subject to a security

 

interest, the department of state is not required to issue a

 

certificate of title to the owner of the watercraft or a lienholder

 

if it maintains a record of title electronically. After all liens

 

have been terminated, or for purposes of retitling the watercraft

 

in another state or any other purpose considered appropriate by the

 

department of state, the department of state may issue a paper copy

 

of the watercraft title to the watercraft owner.

 

     (5) A watercraft sale transaction in which a security interest

 

is entered by electronic means shall include a document recording

 

entry of the electronic security interest and information regarding

 

the financial institution that holds the security interest. When a

 

secured party is presented with payment in satisfaction of the

 

security interest, a secured receipt in a form approved by the

 

department of state may be produced and submitted to the department

 

of state in lieu of the certificate of title for purposes of

 

transferring ownership in the watercraft.

 

     Sec. 80321. A watercraft acquired by the owner prior to

 

January 1, 1977, is not the subject of a certificate of title until

 

it is mortgaged, sold, or transferred, or, subject to section

 

80320(4), a lien is placed on the watercraft.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.