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Indiana House Bill HB1258

Indiana 2022 Regular Session

Indiana House Bill HB1258 Compare Versions

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22 Introduced Version
33 HOUSE BILL No. 1258
44 _____
55 DIGEST OF INTRODUCED BILL
66 Citations Affected: IC 9-17-5-6.
77 Synopsis: Electronic lien and title system. Amends as follows the
88 Indiana Code section requiring the bureau of motor vehicles (bureau)
99 to implement a statewide electronic lien and title system (system) to
1010 process vehicle titles and transactions involving security interests in
1111 vehicles: (1) Provides that if the bureau elects under the statute to allow
1212 qualified electronic lien service providers (providers) to facilitate the
1313 creation of the system, a participating provider may, upon
1414 implementation of the system, recover the provider's proportionate
1515 share of the costs associated with the development and ongoing
1616 administration of the system by charging a fee in an amount that is: (A)
1717 consistent with market pricing; and (B) determined by the bureau upon
1818 implementation of the system; for each lien notification transaction
1919 provided through the system. (Current law provides that if the bureau
2020 elects under the statute to contract with a vendor to develop the system,
2121 the vendor may recover, upon implementing the system, system
2222 development and administration costs through the imposition of a fee.
2323 However, if the bureau elects to allow providers to facilitate the
2424 creation of the system, current law requires each participating provider
2525 to remit to the bureau, not later than 30 days after being notified of the
2626 provider's qualification to participate, a payment in the amount of the
2727 provider's proportionate share of the total cost to develop the system.)
2828 (2) Prohibits a provider from charging lienholders or their agents any
2929 additional fee for lien releases, assignments, or transfers (as is provided
3030 for in current law with respect to the lien notification fee that a vendor
3131 selected by the bureau is authorized to charge). (3) Authorizes
3232 lienholders or their agents to charge: (A) the borrower in a vehicle
3333 (Continued next page)
3434 Effective: July 1, 2022.
3535 Pressel
3636 January 10, 2022, read first time and referred to Committee on Roads and Transportation.
3737 2022 IN 1258—LS 7189/DI 101 Digest Continued
3838 loan; or (B) the lessee in a vehicle lease; an amount equal to any lien
3939 notification fee imposed by a provider, plus a fee in an amount not to
4040 exceed $3 for each electronic lien transaction (as is provided for in
4141 current law if the bureau elects under the statute to contract with a
4242 vendor to develop the system). (4) Eliminates the requirement that each
4343 provider remit to the bureau an annual fee: (A) established by the
4444 bureau; and (B) not exceeding $3,000; for the operation and
4545 maintenance of the system.
4646 2022 IN 1258—LS 7189/DI 1012022 IN 1258—LS 7189/DI 101 Introduced
4747 Second Regular Session of the 122nd General Assembly (2022)
4848 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
4949 Constitution) is being amended, the text of the existing provision will appear in this style type,
5050 additions will appear in this style type, and deletions will appear in this style type.
5151 Additions: Whenever a new statutory provision is being enacted (or a new constitutional
5252 provision adopted), the text of the new provision will appear in this style type. Also, the
5353 word NEW will appear in that style type in the introductory clause of each SECTION that adds
5454 a new provision to the Indiana Code or the Indiana Constitution.
5555 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
5656 between statutes enacted by the 2021 Regular Session of the General Assembly.
5757 HOUSE BILL No. 1258
5858 A BILL FOR AN ACT to amend the Indiana Code concerning
5959 motor vehicles.
6060 Be it enacted by the General Assembly of the State of Indiana:
6161 1 SECTION 1. IC 9-17-5-6, AS ADDED BY P.L.81-2021, SECTION
6262 2 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1,
6363 3 2022]: Sec. 6. (a) As used in this section, "qualified service provider"
6464 4 means a person able to provide electronic lien or electronic title
6565 5 services in coordination with vehicle lienholders and state departments
6666 6 of motor vehicles.
6767 7 (b) As used in this section, "qualified vendor" refers to a person with
6868 8 whom the bureau contracts to:
6969 9 (1) develop;
7070 10 (2) implement; and
7171 11 (3) provide ongoing support with respect to;
7272 12 a statewide electronic lien and title system under this section.
7373 13 (c) As used in this section, "statewide electronic lien and title
7474 14 system" or "system" means a statewide electronic lien and title system
7575 15 implemented by the bureau under this section to process:
7676 2022 IN 1258—LS 7189/DI 101 2
7777 1 (1) vehicle titles;
7878 2 (2) certificate of title data in which a lien is notated; and
7979 3 (3) the notification, maintenance, and release of security interests
8080 4 in vehicles;
8181 5 through electronic means instead of paper documents.
8282 6 (d) Not later than the dates set forth in subsection (h), the bureau
8383 7 shall implement a statewide electronic lien and title system for the
8484 8 following purposes:
8585 9 (1) To facilitate and promote commerce and governmental
8686 10 transactions by validating and authorizing the use of electronic
8787 11 records.
8888 12 (2) To modernize the law and eliminate barriers to electronic
8989 13 commerce and governmental transactions resulting from
9090 14 uncertainties related to handwritten and other written materials.
9191 15 (3) To promote uniformity of the law among the states relating to
9292 16 the use of electronic and similar technological means of effecting
9393 17 and performing commercial and governmental transactions.
9494 18 (4) To promote public confidence in the validity, integrity, and
9595 19 reliability of electronic commerce and governmental transactions.
9696 20 (5) To promote the development of the legal and business
9797 21 infrastructure necessary to implement electronic commerce and
9898 22 governmental transactions.
9999 23 (e) The bureau may:
100100 24 (1) contract with one (1) or more qualified vendors to develop and
101101 25 implement a statewide electronic lien and title system; or
102102 26 (2) develop and make available to qualified service providers a
103103 27 well defined set of information services that will enable secure
104104 28 access to the data and internal application components necessary
105105 29 to facilitate the creation of a statewide electronic lien and title
106106 30 system.
107107 31 (f) If the bureau elects under subsection (e)(1) to contract with one
108108 32 (1) or more qualified vendors to develop and implement a statewide
109109 33 electronic lien and title system, the following apply:
110110 34 (1) The bureau shall issue a competitive request for proposals to
111111 35 assess the qualifications of any vendor seeking to develop,
112112 36 implement, and provide ongoing support for the system. The
113113 37 bureau may reserve the right to receive input concerning
114114 38 specifications for the establishment and operation of the system
115115 39 from parties that do not respond to the bureau's request for
116116 40 proposals.
117117 41 (2) A contract entered into between the bureau and a qualified
118118 42 vendor may not provide for any costs or charges payable by the
119119 2022 IN 1258—LS 7189/DI 101 3
120120 1 bureau to the qualified vendor. The qualified vendor shall
121121 2 reimburse the bureau for any reasonable and documented costs
122122 3 incurred by the bureau and directly associated with the
123123 4 development, implementation, or ongoing support of the system.
124124 5 (3) Upon implementing a statewide electronic lien and title
125125 6 system under this section, the qualified vendor may charge
126126 7 participating lienholders or their agents a fee for each lien
127127 8 notification transaction provided through the system, in order to
128128 9 recover the qualified vendor's costs associated with the
129129 10 development, implementation, and ongoing administration of the
130130 11 system. A lien notification fee under this subdivision must be
131131 12 consistent with market pricing and may not exceed three dollars
132132 13 and fifty cents ($3.50). The qualified vendor may not charge
133133 14 lienholders or their agents any additional fee for lien releases,
134134 15 assignments, or transfers. The qualified vendor may not charge a
135135 16 fee under this subdivision to a state agency or its agents for lien
136136 17 notification, lien release, lien assignment, or lien transfer. To
137137 18 recover their costs associated with the lien, participating
138138 19 lienholders or their agents may charge:
139139 20 (A) the borrower in a vehicle loan; or
140140 21 (B) the lessee in a vehicle lease;
141141 22 an amount equal to any lien notification fee imposed by the
142142 23 qualified vendor under this subdivision, plus a fee in an amount
143143 24 not to exceed three dollars ($3) for each electronic transaction in
144144 25 which a lien is notated.
145145 26 (4) A qualified vendor may also serve as a qualified service
146146 27 provider to motor vehicle lienholders if the following conditions
147147 28 are met:
148148 29 (A) The contract between the bureau and the qualified vendor
149149 30 must include provisions specifically prohibiting the qualified
150150 31 vendor from using information concerning vehicle titles for
151151 32 any commercial, marketing, business, or other purpose not
152152 33 specifically contemplated by this chapter.
153153 34 (B) The contract between the bureau and the qualified vendor
154154 35 must include an acknowledgment by the qualified vendor that
155155 36 the qualified vendor is required to enter into agreements to
156156 37 exchange electronic lien data with any:
157157 38 (i) qualified service providers that offer electronic lien or
158158 39 title services in Indiana and that have been approved by the
159159 40 bureau for participation in the system; and
160160 41 (ii) qualified service providers that are not qualified vendors.
161161 42 (C) The bureau must periodically monitor the fees charged by
162162 2022 IN 1258—LS 7189/DI 101 4
163163 1 a qualified vendor that also:
164164 2 (i) serves as a qualified service provider to lienholders; or
165165 3 (ii) provides services as a qualified vendor to other qualified
166166 4 service providers;
167167 5 to ensure that the qualified vendor is not engaging in predatory
168168 6 pricing.
169169 7 (g) If the bureau elects under subsection (e)(2) to develop an
170170 8 interface to provide qualified service providers secure access to data to
171171 9 facilitate the creation of a statewide electronic lien and title system, the
172172 10 following apply:
173173 11 (1) The bureau shall establish:
174174 12 (A) the total cost to develop the statewide electronic lien and
175175 13 title system by July 1, 2021;
176176 14 (B) qualifications for third party service providers offering
177177 15 electronic lien services; and
178178 16 (C) a qualification process to:
179179 17 (i) evaluate electronic lien and title system technologies
180180 18 developed by third party service providers; and
181181 19 (ii) determine whether such technologies comply with
182182 20 defined security and platform standards.
183183 21 (2) Not later than February 1, 2022, the bureau shall publish on
184184 22 the bureau's Internet web site the qualifications established by the
185185 23 bureau under subdivision (1). A third party service provider that
186186 24 seeks to become qualified by the bureau under this subsection
187187 25 must demonstrate the service provider's qualifications, in the form
188188 26 and manner specified by the bureau, not later than thirty (30) days
189189 27 after the date of the bureau's publication under this subdivision.
190190 28 After the elapse of the thirty (30) day period during which third
191191 29 party service providers may respond to the bureau's publication
192192 30 under this subdivision, the bureau shall notify each responding
193193 31 third party service provider as to:
194194 32 (A) the total cost to develop the system, as determined by
195195 33 the bureau under subdivision (1); and
196196 34 (B) whether the third party service provider has met the
197197 35 qualifications established by the bureau under subdivision (1)
198198 36 and is approved to participate in the statewide electronic lien
199199 37 and title system.
200200 38 (3) Not later than thirty (30) days after receiving a notice of
201201 39 approval from the bureau under subdivision (2), each qualified
202202 40 service provider shall remit to the bureau a payment in an amount
203203 41 equal to the total development costs of the system divided by the
204204 42 total number of qualified service providers participating in the
205205 2022 IN 1258—LS 7189/DI 101 5
206206 1 system. notify the bureau of the qualified service provider's
207207 2 intention to participate in the statewide electronic lien and
208208 3 title system.
209209 4 (4) If a third party service provider that did not
210210 5 (A) submit proof of its qualifications under subdivision (2) or
211211 6 (B) pay initial development costs under subdivision (3);
212212 7 later wishes to participate in the system, the third party service
213213 8 provider may apply to the bureau to participate in the system. The
214214 9 bureau shall allow the third party service provider to participate
215215 10 in the system if the third party service provider meets the
216216 11 qualifications established by the bureau under subdivision (1).
217217 12 and pays to the department the third party service provider's
218218 13 proportional share of the system development costs.
219219 14 (5) Each qualified service provider shall remit to the bureau, on
220220 15 a date prescribed by the bureau, an annual fee established by the
221221 16 bureau and not to exceed three thousand dollars ($3,000), to be
222222 17 used for the operation and maintenance of the system.
223223 18 (6) (5) A contract entered into between the bureau and a qualified
224224 19 service provider may not provide for any costs or charges payable
225225 20 by the bureau to the qualified service provider. The qualified
226226 21 service provider shall reimburse the bureau for the qualified
227227 22 service provider's proportionate share of any reasonable and
228228 23 documented costs incurred by the bureau and directly
229229 24 associated with the development, implementation, or ongoing
230230 25 support of the system.
231231 26 (7) (6) Upon the implementation of a statewide electronic lien and
232232 27 title system under this section, a qualified service provider may
233233 28 charge participating lienholders or their agents transaction fees
234234 29 consistent with market pricing. a fee, in an amount that is
235235 30 consistent with market pricing and is determined by the
236236 31 bureau upon implementation of the system, for each lien
237237 32 notification transaction provided through the system, in order
238238 33 to recover the qualified service provider's proportionate share
239239 34 of the costs associated with the development, implementation,
240240 35 and ongoing administration of the system. The qualified
241241 36 service provider may not charge lienholders or their agents
242242 37 any additional fee for lien releases, assignments, or transfers.
243243 38 A fee under this subdivision may not be charged to a state agency
244244 39 or its agents for lien notification, lien release, lien assignment, or
245245 40 lien transfer. To recover their costs associated with a lien,
246246 41 participating lienholders or their agents may charge:
247247 42 (A) the borrower in a vehicle loan; or
248248 2022 IN 1258—LS 7189/DI 101 6
249249 1 (B) the lessee in a vehicle lease;
250250 2 an amount equal to any lien notification fee imposed by a
251251 3 qualified service provider under this subdivision, plus a fee in
252252 4 an amount not to exceed three ($3) for each electronic
253253 5 transaction in which a lien is notated.
254254 6 (8) (7) The contract between the bureau and a qualified service
255255 7 provider must include provisions specifically prohibiting the
256256 8 qualified service provider from using information concerning
257257 9 vehicle titles for any commercial, marketing, business, or other
258258 10 purpose not specifically contemplated by this chapter.
259259 11 (h) Subject to subsection (i), the bureau shall implement, and allow
260260 12 or require the use of, a statewide electronic lien and title system under
261261 13 this section as follows:
262262 14 (1) A statewide electronic lien system that is capable of
263263 15 processing:
264264 16 (A) certificate of title data in which a lien is notated; and
265265 17 (B) the notification, maintenance, and release of security
266266 18 interests in vehicles;
267267 19 through electronic means must be made available for voluntary
268268 20 use by vehicle lienholders not later than February 1, 2022.
269269 21 (2) Subject to subsection (j)(5), the bureau shall require that the
270270 22 statewide electronic lien system made available under subdivision
271271 23 (1) be used for processing:
272272 24 (A) certificate of title data in which a lien is notated; and
273273 25 (B) the notification, maintenance, and release of security
274274 26 interests in vehicles;
275275 27 after June 30, 2022.
276276 28 (3) A statewide electronic title system capable of processing
277277 29 vehicle titles through electronic means must be made available for
278278 30 voluntary use by vehicle dealers, lienholders, and owners not later
279279 31 than July 1, 2022.
280280 32 (4) The bureau shall require that the statewide electronic title
281281 33 system made available under subdivision (3) be used for
282282 34 processing vehicle titles after June 30, 2023.
283283 35 (i) Subsection (h) does not prohibit the bureau or any:
284284 36 (1) qualified vendor with whom the bureau contracts under
285285 37 subsection (f); or
286286 38 (2) qualified service provider with whom the bureau contracts
287287 39 under subsection (g);
288288 40 from implementing, making available, or requiring the use of a
289289 41 statewide electronic lien system described in subsection (h)(1) at the
290290 42 same time as, or in conjunction with, a statewide electronic title system
291291 2022 IN 1258—LS 7189/DI 101 7
292292 1 described in subsection (h)(3), or from implementing, making
293293 2 available, or requiring the use of a statewide electronic lien system
294294 3 described in subsection (h)(1) or a statewide electronic title system
295295 4 described in subsection (h)(3) before the applicable dates otherwise set
296296 5 forth in subsection (h).
297297 6 (j) The following apply to the use of a statewide electronic lien
298298 7 system described in subsection (h)(1):
299299 8 (1) Notwithstanding section 5(b) of this chapter, if there are one
300300 9 (1) or more liens or encumbrances on a motor vehicle, the bureau
301301 10 may electronically transmit the lien to the first lienholder and
302302 11 notify the first lienholder of any additional liens. Subsequent lien
303303 12 satisfactions may be electronically transmitted to the bureau and
304304 13 must include the name and address of the person satisfying the
305305 14 lien.
306306 15 (2) Whenever the electronic transmission of lien notifications and
307307 16 lien satisfactions is used, a certificate of title need not be issued
308308 17 until the last lien is satisfied and a clear certificate of title can be
309309 18 issued to the owner of the motor vehicle. The bureau may print or
310310 19 issue electronically the clear certificate of title to the owner or
311311 20 subsequent assignee of the motor vehicle.
312312 21 (3) If a motor vehicle is subject to an electronic lien, the
313313 22 certificate of title for the motor vehicle is considered to be
314314 23 physically held by the lienholder for purposes of compliance with
315315 24 state or federal odometer disclosure requirements.
316316 25 (4) A certified copy of the bureau's electronic record of a lien is
317317 26 admissible in any civil, criminal, or administrative proceeding in
318318 27 Indiana as evidence of the existence of the lien. If a certificate of
319319 28 title is maintained electronically in a statewide electronic title
320320 29 system described in subsection (h)(3), a certified copy of the
321321 30 bureau's electronic record of the certificate of title is admissible
322322 31 in any civil, criminal, or administrative proceeding in Indiana as
323323 32 evidence of the existence and contents of the certificate of title.
324324 33 (5) All individuals and lienholders who conduct at least twelve
325325 34 (12) lien transactions annually must use the statewide electronic
326326 35 lien and title system implemented under this section to record
327327 36 information concerning the perfection and release of a security
328328 37 interest in a vehicle.
329329 38 (6) An electronic notice or release of a lien made through the
330330 39 statewide electronic lien and title system implemented under this
331331 40 section has the same force and effect as a notice or release of a
332332 41 lien made on a paper document.
333333 42 (7) The bureau may convert an existing paper lien to an electronic
334334 2022 IN 1258—LS 7189/DI 101 8
335335 1 lien upon request of the primary lienholder. The bureau, or a third
336336 2 party contracting with the bureau under this section, is authorized
337337 3 to collect a fee not to exceed three dollars ($3) for each
338338 4 conversion performed under this subdivision. A fee under this
339339 5 subdivision may not be charged to a state agency or its agents.
340340 6 (8) Notwithstanding section 5 of this chapter, any requirement
341341 7 that a security interest or other information appear on a certificate
342342 8 of title is satisfied by the inclusion of that information in an
343343 9 electronic file maintained in an electronic title system.
344344 10 (k) Nothing in this section precludes the bureau from collecting a
345345 11 title fee for the preparation and issuance of a title.
346346 12 (l) The bureau may adopt rules under IC 4-22-2 to implement this
347347 13 section, including emergency rules in the manner provided by
348348 14 IC 4-22-2-37.1. Notwithstanding IC 4-22-2-37.1(g), an emergency rule
349349 15 adopted by the bureau under this subsection and in the manner
350350 16 provided by IC 4-22-2-37.1 expires on the date on which a rule that
351351 17 supersedes the emergency rule is adopted by the bureau under
352352 18 IC 4-22-2-24 through IC 4-22-2-36.
353353 2022 IN 1258—LS 7189/DI 101