Security Interests

V.S.A. tit. 23, ch. 21, subch. 3

in effect

23 V.S.A. § 2041 Certain liens and security interests not affected

2041. Certain liens and security interests not affected This chapter does not apply to or affect: (1) a lien given by statute or rule of law to a supplier of services or materials for the vehicle; (2) a lien given by statute to the United States, this State, or any political subdivision of this State; (3) a security interest in a vehicle created by a manufacturer or dealer who holds the vehicle for sale, but a buyer in the ordinary course of trade from the manufacturer or dealer takes free of the security interest. Added 1969, No. 297 (Adj. Sess.), § 1, eff. Sept. 1, 1971.

23 V.S.A. § 2042 Perfecting security interest

2042. Perfecting security interest (a) Unless excepted by section 2041 of this title, a security interest in a vehicle of a type for which a certificate of title is required is not valid against creditors of the owner or subsequent transferees or lienholders of the vehicle unless perfected as provided in this subchapter. (b) A security interest is perfected by the delivery to the Commissioner of the existing certificate of title, if any, an application for a certificate of title containing the name and address of the lienholder and the date of his or her security agreement, and the required fee. It is perfected as of the time of its creation if delivery is completed within 20 days thereafter, otherwise as of the time of the delivery. (c) If a vehicle is subject to a security interest when brought into this State, the validity of the security interest is determined by the law of the jurisdiction where the vehicle was when the security interest attached, subject to the following: (1) If the parties understood at the time the security interest attached that the vehicle would be kept in this State and it was brought into this State within 30 days thereafter for purposes other than transportation through this State, the validity of the security interest in this State is determined by the law of this State. (2) If the security interest was perfected under the law of the jurisdiction where the vehicle was when the security interest attached, the following rules apply: (A) If the name of the lienholder is shown on an existing certificate of title issued by that jurisdiction, his or her security interest continues perfected in this State. (B) If the name of the lienholder is not shown on an existing certificate of title issued by that jurisdiction, the security interest continues perfected in this State for four months after a first certificate of title of the vehicle is issued in this State, and also thereafter if, within the four-month period, it is perfected in this State. The security interest may also be perfected in this State after the expiration of the four-month period; in that case perfection dates from the time of perfection in this State. (3) If the security interest was not perfected under the law of the jurisdiction where the vehicle was when the security interest attached, it may be perfected in this State; in that case, perfection dates from the time of perfection in this State. (4) A security interest may be perfected under subdivision (2)(B) or subdivision (3) of this subsection either as provided in subsection (b) of this section or by the lienholder delivering to the Commissioner a notice of security interest in the form the Commissioner prescribes and the required fee. Added 1969, No. 297 (Adj. Sess.), § 1, eff. Sept. 1, 1971; amended 1979, No. 38.

23 V.S.A. § 2043 Duties on creation of security interest

2043. Duties on creation of security interest If an owner creates a security interest in a vehicle: (1) The owner shall immediately execute the application, in the space provided on the certificate of title or on a separate form the Commissioner prescribes, to name the lienholder on the certificate, showing the name and address of the lienholder and the date of the lienholder’s security agreement, and cause the certificate, the application, and the required fee to be delivered to the lienholder. (2) The lienholder shall immediately cause the certificate, the application, and the required fee to be mailed or delivered to the Commissioner. (3) Upon request of the owner or subordinate lienholder, a lienholder in possession of the certificate of title shall either mail or deliver the certificate to the subordinate lienholder for delivery to the Commissioner or, upon receipt from the subordinate lienholder of the owner’s application and the required fee, mail or deliver them to the Commissioner with the certificate. The delivery of the certificate does not affect the rights of the first lienholder under his or her security agreement. (4) Upon receipt of the certificate of title, the application, and the required fee, the Commissioner shall either endorse the certificate or issue a new certificate containing the name and address of the new lienholder, and mail the certificate to the first lienholder named in it. Added 1969, No. 297 (Adj. Sess.), § 1, eff. Sept. 1, 1971; amended 2023, No. 85 (Adj. Sess.), § 301, eff. July 1, 2024.

23 V.S.A. § 2044 Assignment of security interest

2044. Assignment of security interest (a) A lienholder may assign, absolutely or otherwise, his or her security interest in the vehicle to a person other than the owner without affecting the interest of the owner or the validity of the security interest, but any person without notice of the assignment is protected in dealing with the lienholder as the holder of the security interest and the lienholder remains liable for any obligations as lienholder until the assignee is named as lienholder on the certificate. (b) The assignee may, but need not to perfect the assignment, have the certificate of title endorsed or issued with the assignee named as lienholder, upon delivering to the Commissioner the certificate and an assignment by the lienholder named in the certificate in the form the Commissioner prescribes. Added 1969, No. 297 (Adj. Sess.), § 1, eff. Sept. 1, 1971.

23 V.S.A. § 2045 Release of security interest

2045. Release of security interest (a) Upon satisfaction of a security interest in a vehicle for which the lienholder possesses the certificate of title, the lienholder shall, within 12 business days after a request for release of the security interest, fully execute a release of the security interest in the space provided on the certificate or in the form the Commissioner prescribes and mail or deliver the certificate and release to the next named lienholder or, if none, to the owner or any person authorized by the owner to receive the certificate (hereafter, “owner’s designee”). The owner or the owner’s designee, other than a dealer holding the vehicle for resale, shall promptly cause the certificate and release to be mailed or delivered to the Commissioner, who shall release the lienholder’s rights on the certificate or issue a new certificate. (b) Upon satisfaction of the security interest of a subordinate lienholder who does not possess the certificate of title, the subordinate lienholder shall, within 12 business days after a request for release of the security interest, fully execute a release in the form the Commissioner prescribes and deliver the release to the owner or the owner’s designee. The lienholder in possession of the certificate of title shall either deliver the certificate to the owner or the owner’s designee for delivery to the Commissioner or, if the lienholder in possession receives the release, mail or deliver it with the certificate to the Commissioner, who shall release the subordinate lienholder’s rights on the certificate or issue a new certificate. A subordinate lienholder whose security interest is fully satisfied but receives the certificate of title pursuant to subsection (a) of this section shall, within three business days after its receipt, mail or deliver the title to the owner or the owner’s designee. (c) For purposes of subsections (a) and (b) of this section, a release not sent by electronic means is deemed fully executed when it is completed and placed in the U.S. mail postage prepaid or delivered to the person requesting the release as shown on the form so requesting it. (d) A lienholder that fails to satisfy the requirements of subsection (a) or (b) of this section shall, upon written demand sent by certified mail, be liable to pay the owner or the owner’s designee $25.00 per day for each day that the requirements of subsection (a) or (b) remain unsatisfied, up to a maximum of $2,500.00, in addition to any other remedies that may be available at law or equity. If the lienholder fails to pay the amount owed under this subsection within 60 days following the written demand, the owner or the owner’s designee may bring a civil action and, if the lienholder is found to have violated subsection (a) or (b) of this section, the amount owed under this subsection shall be trebled, resulting in an award of up to $7,500.00, and reasonable attorney’s fees and costs shall be awarded. Added 1969, No. 297 (Adj. Sess.), § 1, eff. Sept. 1, 1971; amended 2011, No. 46, § 14; 2019, No. 131 (Adj. Sess.), § 216; 2023, No. 85 (Adj. Sess.), § 302, eff. July 1, 2024.

23 V.S.A. § 2046 Lienholder to furnish information

2046. Lienholder to furnish information A lienholder named in a certificate of title shall, upon written request of the owner or of another lienholder named on the certificate, disclose any pertinent information as to his or her security agreement and the indebtedness secured by it. Added 1969, No. 297 (Adj. Sess.), § 1, eff. Sept. 1, 1971.

23 V.S.A. § 2047 Method of perfecting security interest exclusive

2047. Method of perfecting security interest exclusive The method provided in this subchapter of perfecting and giving notice of security interests subject to this subchapter is exclusive. Security interests subject to this subchapter are hereby exempted from the provisions of law that otherwise require or relate to the filing of instruments creating or evidencing security interests. Added 1969, No. 297 (Adj. Sess.), § 1, eff. Sept. 1, 1971.

23 V.S.A. § 2048 Terminal rental adjustment clauses; vehicle leases that are not sales or security interests

2048. Terminal rental adjustment clauses; vehicle leases that are not sales or security interests In the case of motor vehicles or trailers, notwithstanding any other provision of law, a transaction does not create a sale or security interest merely because it provides that the rental price is permitted or required to be adjusted under the agreement either upward or downward by reference to the amount realized upon sale or other disposition of the motor vehicle or trailer. Added 1993, No. 27, § 6.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/23/021Fetched: 10/21/2026