Bankruptcy/Debtor-Creditor Rights Blog

A SIGH OF RELIEF FOR ASSIGNEES OF VEHICLE CONTRACTS: A PERFECTED LIEN ON A VEHICLE REMAINS PERFECTED WHEN ASSIGNED EVEN IF THE ASSIGNEE TAKES NO FURTHER ACTION

Posted February 8, 2010

Author: Chris A. McNulty

A recent attempt to attack an assignees’ secured lien on a vehicle under Arkansas Code Annotated §27-14-908 has been frustrated by recent Bankruptcy Court decisions. The argument is always the same—in order to maintain perfection under Arkansas law, an assignee must be named on the vehicle’s certificate of title.

Judge James G. Mixon first confronted the issue in In re Johnson. In that case, the debtors purchased a recreational vehicle, and the creditor properly perfected its lien on the vehicle by noting its lien on the face of the certificate title in accordance with Arkansas Code Annotated §27-14-806. The Court held that “Arkansas law does not require the assignee’s name to appear on the certificate of title to maintain perfection of an existing lien in a vehicle.” In re Johnson, 407 B.R. 364, 369 (Bankr. E.D. Ark. 2009). The In re Johnson holding has subsequently been extended beyond recreational vehicles to vehicles (See In re Gaines, 414 B.R. 494, 498 (Bankr. E.D. Ark. 2009) (holding that “Arkansas law does not require an assignee’s name to appear on a certificate of title to maintain perfection of an existing lien on a vehicle”)), and mobile homes (See In re Granderson, 2009 Bankr. LEXIS 3485 (Bankr. E.D. Ark. 2009) (holding that where a creditor properly perfected its lien in a mobile home, an assignee of that lien need not take any further action for the lien to remain perfected under Arkansas law)).

Therefore, assignees of a properly perfected security interest in a vehicle can rest, easily assured that they do not need to have their names put on the certificate of title in order to maintain their perfection in the collateral.

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