A BILL TO BE ENTITLED
AN ACT to expand the required use of the electronic lien system implemented by the division of motor vehicles and to revise the law governing when a motor vehicle dealer that does not have a motor vehicle's statement of origin or certificate of title may transfer title to the motor vehicle.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 20‑58.4A(i) reads as rewritten:
"(i)	Mandatory Participation. – All individuals and lienholders who conduct at least five transactions annually shall utilize the electronic lien system implemented in subsection (a) of this section to record information concerning the perfection and release of a security interest in a vehicle. No lien on a motor vehicle shall be noted on the certificate of title or otherwise perfected by the Division unless the electronic lien system is utilized by the lienholder in accordance with this section."
SECTION 2.  G.S. 20‑72(b) reads as rewritten:
"(b)	In order to assign or transfer title or interest in any motor vehicle registered under the provisions of this Article, the owner shall execute in the presence of a person authorized to administer oaths an assignment and warranty of title on the reverse of the certificate of title in form approved by the Division, including in such assignment the name and address of the transferee; and no title to any motor vehicle shall pass or vest until such assignment is executed and the motor vehicle delivered to the transferee. The provisions of this section shall not apply to any foreclosure or repossession under a chattel mortgage or conditional sales contract or any judicial sale. The provisions of this subsection shall not apply to (i) any transfer to an insurer pursuant to G.S. 20‑109.1(b)(2) or (ii) any transfer to a used motor vehicle dealer pursuant to G.S. 20‑109.1(e1).
When a manufacturer's statement of origin or an existing certificate of title on a motor vehicle is unavailable, a motor vehicle dealer licensed under Article 12 of this Chapter may also transfer title to another by certifying in writing in a sworn statement to the Division that all prior perfected liens on the vehicle have been paid and that the motor vehicle dealer, despite having used reasonable diligence, was unable to obtain the vehicle's statement of origin or certificate of title on or prior to the date the dealer sold or transferred the vehicle because the statement of origin or certificate of title was (i) not delivered to the dealer or (ii) lost or misplaced by the dealer. The Division is authorized to develop a form for this purpose. In the absence of a form developed by the Division, a dealer may use any form that satisfies the requirements of this subsection, provided that the dealer submits the completed form and certificate of title to the Division no later than 45 days following the sale or transfer of the vehicle. It is a Class H felony to knowingly and intentionally file a false sworn certification in accordance with this subsection. A dealer principal, owner, or manager of a motor vehicle dealership shall be liable in accordance with G.S. 20‑72.1.
Any person transferring title or interest in a motor vehicle shall deliver the certificate of title duly assigned in accordance with the foregoing provision to the transferee at the time of delivering the vehicle, except when a certificate of title is unavailable as provided in G.S. 20‑72.1, and except that where a security interest is obtained in the motor vehicle from the transferee in payment of the purchase price or otherwise, the transferor shall deliver the certificate of title to the lienholder and the lienholder shall forward the certificate of title together with the transferee's application for new title and necessary fees to the Division within 20 days. Any person who delivers or accepts a certificate of title assigned in blank shall be guilty of a Class 2 misdemeanor.
The title to a salvage vehicle shall be forwarded to the Division as provided in G.S. 20‑109.1, except with respect to the title of any salvage vehicle transferred pursuant to G.S. 20‑109.1(b)(2) or G.S. 20‑109.1(e1)."
SECTION 3.  Part 4 of Article 3 of Chapter 20 of the General Statutes is amended by adding a new section to read:
"§ 20‑72.1.  Transfer by owner when a certificate of title is unavailable; consumer remedies.
(a)	Notwithstanding any other provision in this Article, when an existing certificate of title on a motor vehicle is unavailable, a motor vehicle dealer licensed under Article 12 of this Chapter shall deliver the certificate of title together with the transferee's application for new title and necessary taxes and fees to the Division within 20 days of receipt of the title, but no later than 45 days following the sale or transfer of the vehicle. The dealer may offer the vehicle for sale provided that any potential purchaser is given written notice prior to sale that the dealer is not in possession of the certificate of title. For purposes of this paragraph, a vehicle's existing certificate of title shall be considered unavailable under either of the following circumstances:
(1)	The dealer is entitled to possession of the title, but it has not been actually delivered to the dealer on or prior to the date the dealer sold or transferred the vehicle.
(2)	The title was lost or misplaced by the dealer on or prior to the date the dealer sold or transferred the vehicle and the dealer has made application to the Division for a duplicate title prior to the sale or transfer of the vehicle.
(b)	In any case where a dealer fails to deliver the certificate of title to the Division within 45 days, the vehicle purchaser shall have the option to rescind the purchase transaction and collect the full purchase price of the vehicle and liquidated damages from the dealer. Liquidated damages shall be one thousand dollars ($1,000) or five percent (5%) of the vehicle purchase price, whichever is greater. Nothing in this section shall be construed to limit any other civil remedies or consumer protections available to the vehicle purchaser."
SECTION 4.  Section 1 of this act becomes effective July 1, 2017. The remainder of this act is effective when it becomes law.