98-040
Response
June 10, 1998
REQUEST
LETTER
May
6, 1998
Dear
Sir or Madam:
I am writing on behalf of COMPANY A
(the "COMPANY A") to request your
confirmation that a program currently being considered by the COMPANY A for
financing leases of the motor vehicles titled and registered in the State of
Utah, as describe herein, conforms with the laws of Utah.
Specifically, the COMPANY A requests your concurrence
that:
1. A certificate of title and registration may be issued in the
name of a business trust as the owner of a motor vehicle; and
2. A beneficial owner of the trust may transfer all or part of
its beneficial interest in the trust without being required to apply for a new
certificate of title or registration for any of the motor vehicles owned by the
trust.
Proposed New Financing Program
The COMPANY A has established a
TRUST (the "Trust") for the
purposes of holding title to motor vehicles and the lease contracts relating to
such vehicles. The Trust will be
properly
qualified to hold title to personal property in the State of Utah. The Trust
will have one
or
more trustees. At least one trustee of the Trust (the "Principal
Trust") will be a bank or trust
company
that is properly qualified to act as a trustee for a trust holding title to
personal property
in
the State of Utah. Initially the COMPANY A will be the sole beneficiary of the
Trust. The COMPANY A will act as the initial servicer (in such capacity, the
"Service") for the Trust.
Under the new program, when a dealer
leases a motor vehicle to a customer, the lease
contract
will be sold or assigned to the Trust or will be entered into directly by the Trusts. The
dealer
or the Servicer, or an agent to their behalf acting pursuant to a power of
attorney executed
by
or on behalf of the Trust, will then make application for the original
certificate of title to the
leased
vehicle, and registration where appropriate, in the name of the Trust. As a result, under
the
proposed program, the Trust, rather than the COMPANY A, would acquire legal ownership of the motor
vehicles and leases and would be shown as the owner of the vehicle on the
certificate of title or registration.
From time to time, the COMPANY A
will identify pools (each, and "Asset
Pool") of leases and related vehicles owned by the Trust, which
pools may be supplemented by additional leases and related vehicles subsequent
to the initial pool identification. The
COMPANY A will instruct the Principal Trustee to create and issue to the
COMPANY A a beneficial interest (a "Portfolio Interest") in the Trust
representing an interest in the Asset Pool.
The COMPANY A will then transfer the Portfolio interest, by means of one
or a series of sales, assignments or pledges, to a subsequent holder or holders,
in exchange for the purchase price of, or a loan secured by, the Portfolio
Interest. The COMPANY A will continue
to own the beneficial interest in the Trust not related to any Asset Pool.
Irrespective of such transfer of the
Portfolio Interest, the Trust will continue to hold the
legal
ownership interest in the leases and the related motor vehicles in the Asset
Pool.
Consequently,
although a beneficial interest in the Trust will be transferred, title and the
legal
ownership
interest in the vehicles will remain in the Trust and will not be
transferred. At the
termination
of the lease contract or upon any other sale or transfer of legal title to a
motor vehicle subject to a lease, all requirements of the State of Utah for
retitling and registering the motor vehicle will be followed.
The Bank's Request
In connection with the COMPANY A's
proposed new financing program described above the COMPANY A seeks your written
confirmation that under the laws of the State of Utah:
1. A
certificate of title and registration may be issued in the name of the Trust as
owner of a motor vehicle; and
2. The
COMPANY A or another beneficial owner of an interest in the Trust may transfer
all or part of its beneficial interest in the Trust (e.g., a Portfolio
Interest) without being required to apply for a new certificate of title or
registration for any of the motor vehicles owned by the Trust.
Any additional information you may
be able to provide, including applicable motor
vehicle
regulations or policies and procedures respecting titling vehicles in the name
of a trust
such
as the Trust, would be greatly appreciated.
If you have any questions, please contact me at
#####.
Thank you in advance for your
attention to this matter.
Very
Truly Yours,
NAME
June
10, 1998
NAME
ADDRESS
CITY,
STATE ZIP
RE: Advisory
Opinion - Registration and Titling of Motor Vehicles
Dear
NAME,
We have received your request for an
advisory opinion concerning the registration and titling of motor vehicles
owned by a business trust. Your
specifically ask for confirmation that:
1. A motor vehicle may be registered and
titled in the name of a CITY business trust; and
2. A beneficial owner of that trust may
transfer all or part of its beneficial interest in the trust without being
required to retitle and reregister any of the motor vehicles owned by that
trust.
As to your first question, a motor
vehicle is required to be registered and titled by its owner. Utah Code Ann. §41-1a-102(40)(c) states that
if a vehicle is the subject of an agreement to lease, the lessor is considered
the owner until the lessee exercises his option to purchase the vehicle. If your proposed financing program
establishes that the CITY business trust is the lessor of the leased motor
vehicles, then it would be considered the owner for registration and titling
purposes.
As to your second question, it would
appear from your statements that the transfer of only a beneficial interest in
the trust would not affect the trust’s status as the lessor of the motor
vehicles. If this is indeed the case,
then the trust would remain the owner of the vehicles and there would be no
need to retitle and reregister the vehicles.
However, should you organize the transfer so that an entity other than
the trust becomes the lessor of the vehicles, then the vehicles would need to
be titled and registered in the name of the new lessor.
Please contact us if you have any
other questions.
For
the Commission,
Joe
B. Pacheco
Commissioner
^^