MTV-25-13-00005-A Proof of Satisfaction of Lien by Dealers

1/8/14 N.Y. St. Reg. MTV-25-13-00005-A

NEW YORK STATE REGISTER

VOLUME XXXVI, ISSUE 1

January 08, 2014

RULE MAKING ACTIVITIES

DEPARTMENT OF MOTOR VEHICLES

NOTICE OF ADOPTION

 

I.D No. MTV-25-13-00005-A

Filing No. 1250

Filing Date. Dec. 24, 2013

Effective Date. Jan. 08, 2014

Proof of Satisfaction of Lien by Dealers

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken:

Amendment of section 20.17 of Title 15 NYCRR.

Statutory authority:

Vehicle and Traffic Law, sections 215(a), 2121(a) and (b)

Subject:

Proof of satisfaction of lien by dealers.

Purpose:

To establish procedures for dealers to demonstrate that they have satisfied a lien in order to obtain a clear title.

Text or summary was published

in the June 19, 2013 issue of the Register, I.D. No. MTV-25-13-00005-RP.

Final rule as compared with last published rule:

No changes.

Text of rule and any required statements and analyses may be obtained from:

Heidi Bazicki, Department of Motor Vehicles, 6 Empire State Plaza, Rm. 526, Albany, NY 12228, [phone], email: [e-mail]

Assessment of Public Comment

The American Financial Services Association (AFSA) submitted two comments about the revised rule.

Comment: AFSA, as it did in response to the original proposed rule, suggests that the rule should require a standard form in prominent type alerting the lienholder that its security interest will be released unless the lienholder objects. The required notice in Section 20.17(b)(3) of the rule should be incorporated in the standard form.

Response: The Department continues to believe that a standardized form is unnecessary because Section 20.17(b)(3) of the rule explicitly sets forth the language that must be used in the dealer’s notice to the lienholder about the pending release of its lien. In addition, the rule provides that the notice shall be in 14-point type or larger, which should be sufficiently prominent to distinguish the notice from other correspondence. If the Department determines, based on experience after the rule has been in effect, that a standardized form is necessary, the Department always has the option of producing such a form.

Comment: AFSA requests the Department to clarify the meaning of the term “good funds” in Section 20.17(b) of the rule and suggests that the term should not include a check unless it is certified.

Response: This comment appears to conflate two separate issues: (i) the meaning of the term “good funds” and (ii) the acceptable forms of payment to satisfy a lien. As to the first issue, the term “good funds” is not defined in statute, and the Department declines the invitation to define the term in the rule. “Good funds” is a widely used term in commercial transactions and is generally understood to mean that the money tendered in payment of a debt has value equal to the amount of the debt. For example, a payment in cash must be legal tender and not counterfeit. A check or similar instrument tendered in payment must not be forged and there must be sufficient money in the account to pay the instrument. In any event, a requirement that funds be “good” does not dictate the particular form in which a payment must be made.

As to the second issue, acceptable forms of payment to satisfy a lien are dictated by the statute and described further in the rule. Section 2121(b) of the Vehicle and Traffic Law states, in pertinent part, that “evidence that a security interest has been satisfied shall include: (i) evidence that an interbank or electronic transfer of funds has been made; or (ii) evidence that a copy of a cashier’s or bank check has been delivered; or (iii) other evidence as determined to be satisfactory by the commissioner.” In conformance with the statute, Section 20.17(b)(5) of the rule provides that the only acceptable forms of evidence that payment has been made to satisfy the lien are (i) a transmission receipt for an interbank or electronic funds transfer, (ii) a copy of a bank or cashier’s check, or (iii) a written statement from the lienholder acknowledging that the lien has been satisfied. The Department therefore believes the rule is sufficiently clear on this point.