Request By:
Mr. J. U. Grow
Simpson County Clerk
Franklin, Kentucky 42134
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
On September 14, 1979, Kentucky Finance filed a financing statement listing household goods and a 1970 mobile home, with an accompanying affidavit that the mobile home would not be used on public highways.
On October 31, 1979, AVCO Financial Services filed a financing statement listing the same mobile home, with an accompanying license registration receipt issued by the clerk's office on October 30, 1979. Consequently, AVCO was listed as the first lien holder on the license receipt.
Kentucky Finance claims they should be listed as the first lien holder on the license receipt.
Your question: Who is the first lienholder?
Under KRS 186.650 and 186.655, and where the owner or operator intends to use the mobile home on the public roads, registration of the vehicle is necessary. The converse is true [no registration required] where the owner or operator indicates that use on the public roads is not anticipated at the time. An affidavit would thus be appropriate on that point.
Assuming the proper filing of the financing statement by Kentucky Finance, then under KRS 186.045(2), the clerk is required to note the information about the lien on the owner's copy of the certificate of registration. If it is a first lien, it should be noted as such on the certificate of registration. Here, at the time of filing of Kentucky Finance's financing statement, there was no certificate of registration for it in existence, for the reason given above. However, that fact in no way militates against the principle that the proper filing of the financing statement perfected the lien. And the county clerk is now required to note the first lien of Kentucky Finance on the certificate of registration that came into existence later.
The recording of the liens on the certificate of registration does not create the lien. The legal fact of the lien's existence is merely indicated to the public. The lien comes to life when the financing statement is properly filed with the county clerk pursuant to KRS 355.9-401, 355.9-402, and 355.9-403. See also KRS 355.9-302. The court, in Lincoln Bank & Trust Company v. Queenan, Ky., 344 S.W.2d 383 (1961), specifically held that a financing statement properly filed under KRS 355.9-401 and 355.9-402 is a "lien" instrument.
Under the facts given, Kentucky Finance in point of time was the first lienholder.
In Bratcher v. Ashley, Ky., 243 S.W.2d 1011 (1951), the court pointed out at page 1014 that:
"It should be remembered that the validity of an instrument or a lien, as between the parties to the instrument, does not depend upon its proper recordation. * * * It is only where the rights of innocent purchasers or creditors, within the meaning of KRS 382.270, are involved that recordation becomes a factor."
Here, as we said, constructive notice of the first lien was given upon the proper filing of the financing statement of Kentucky Finance. The perfected status continues.