95-091
Response
December 19, 1995
Request
XXXXX
RE: Advisory Opinion - Releasing protected
motor vehicle registration records
Dear XXXXX,
You
asked the Commission for an advisory opinion regarding the release of protected
motor vehicle records. We offer the following guidance:
Background:
Recently
the Motor Vehicle Unit has received two problematic requests for protected
records. The decision whether to
release those records depends upon whether the requesting party has a bona fide
security interest.
The
first situation involves a vehicle left on private property for more than a
year. Under section 41-6-1 16.10 of the
Utah Code, if a vehicle is left on private property without the property
owner's permission for more than 7 days, a peace officer may remove the vehicle
to the state impound lot. The Motor
Vehicle unit, in turn, must notify or attempt to notify the owner or a
lienholder before disposing of the vehicle.
Since
the language of section 41-6-1 16.10 says a peace officer may impound the
vehicle, the statute is permissive. It
imposes no duty on police departments to impound abandoned vehicles from
private property, and many police departments decline to do so. Instead, they instruct the property owner to
contact a private towing company to have the vehicle removed. Presumably, the towing company holds the
vehicle under authority of section 41-6-191 until it is retrieved by the owner
on payment of towing and storage costs.
Section
41-6-191 gives the towing company a possessory lien on the vehicle until the
charges are paid. If the vehicle is not
retrieved after notice to the owner or lienholder, the towing company may
request a transfer of title under section 41-Ia-704. To fulfill the notification requirements under section 41-6-191,
the towing company must access the registration information. If the registration record is protected, the
towing company must show that it has a bona fide security interest in the vehicle
to obtain the registration record.
The
second situation involves an agent who perfects title transfers on behalf of
mechanics holding repairman's liens on vehicles. Under section 38-2-3 of the Utah Code, a mechanic who repairs a
vehicle at the owner's request is entitled to retain possession of the vehicle
until the charges are satisfied. The
repairman's lien is a possessory lien which is subordinate to the rights of
secured lienholders unless it was the secured lienholder who ordered the
repairs. If the repair bill is not
satisfied within a reasonable time, the lienholder may dispose of the vehicle
after giving notice to the person listed on the work order all lienholders
listed on the Motor Vehicle records. §38-2-4 of the Utah Code. The mechanic or his agent, then, must access
the vehicle registration information to make notice. The mechanic may access the records if his possessory lien is
equivalent to a bona fide security interest under section 41-la-116 (4).
Under
section 41-Ia-116 (4) of the Utah Code, protected motor vehicle registration
records may be released to "a person with a bona fide security
interest." Both of these
situations raise an issue as to whether a possessory lien satisfies the
definition of bona fide security interest under section 41-la-116(4).
Issue: Is a possessory lien a "security
interest" within the meaning of section 41-la-116 (4) of the Utah Code?
Technically,
a lien and a security interest are not the same thing. A lien arises by operation of law, and a
security interest arises from a contractual agreement between a debtor and a
secured part (the lender). The terms
“lien” and “security interest” are, however, sometimes used
interchangeably. To avoid confusion the
legislature sometimes specifies whether the terms are equivalent. For instance, the Uniform Fraudulent
Transfer Act defines a lien as a charge against or an interest in property to
secure payment of a debt or performance of an obligation, and includes a
security interest created by agreement....” §25-6-2(8) Utah Code Ann. (emphasis
added). On the other hand, lien is
elsewhere defined as “a charge against or interest in goods to secure payment
of a debt or performance of an obligation, but the term does not include a
security interest.” §70A-2a-103 Utah Code Ann. (emphasis added). The term “lien” is not defined in the Motor
Vehicle Act, but the term “security agreement” is defined as “an interest that
is reserved or created by a security agreement to secure the payment or
performance of an obligation and that is valid against third parties.” §411a-102(52)
Utah Code Ann. (emphasis added). Since
the possessory liens at issue here are created by statute (or operation of law)
rather than by a security agreement, they do not seem to qualify as bona fide
security interests under section 411a-116(4).
From
this analysis it appears that neither the towing companies nor the mechanics
described here have a security interest which entitles them to access protected
records. So what other recourse is
available to them? The property owner,
towing company or mechanic may seek a court order under section 63-2-202(4)
directing the Commission to release the protected record. This is a fairly cumbersome process, so we
are open to a different solution if one can be found.
Section
411a-116(4) suggests a possible solution.
It allows access to protected records for “purposes of safety, product
recall, [or] advisory notices.”
Historically the Commission has interpreted the term "advisory
notice" narrowly to include only notices dealing with important issues of vehicle safety. That interpretation is not mandated by the
statutes, however, so the Commission can reasonably construe the term to
include the statutory notices discussed here.
Please
do the following:
1. Draft an administrative rule to define
"advisory notice." The
definition should be carefully drafted to include, as before, the
manufacturers' notices and to add statutory notices of the type described
here. It should not be so broad as to
include other types of notices.
2. Draft an administrative rule outlining
the conditions under which protected motor vehicle records will be release by
phone.
3. Draft an internal policy to govern the
release of protected motor vehicle records.
We
will review the drafts and discuss this issue further at that time.
Issue: Does the protected status change upon
transfer of ownership?
A
vehicle registration record may be protected under section 41-1a-116. Many vehicle owners are concerned that their
identities and home addresses are connected with their license plates and they
request protected registrations to keep that information confidential. The question that has arisen is this: does
the protected status of the registration expire when the owner trades or sells
the vehicle?
After
the sale is completed and the title is transferred to the new owner, the
protected registration no longer applies to the vehicle's new registered owner
unless the new owner also requests protected status. However, the vehicle's past registration retains its protected
status. If the dealer or new owner
needs access to that protected registration information to retitle the car, he
or she must obtain a notarized release from the registered owner. §63-2-202 (4) (b) (ii) Utah Code Ann.
For
the Commission,
Alice
Shearer
Commissioner