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Pmsi In Car

Discuss the legalities of Bankruptcy Law

Pmsi In Car

Postby Nicholas » Wed Nov 30, 2016 4:59 am

Hello Sir, I have a question regarding PMSI(purchase money security interest). I have read if we buy an automobile by loan, the Bank has no proper PMSI unless it gets Certificate of title from government office or state office. I want ask if bank doesn't do that then can we say that it has failed in proper filing of financing statement?

thanks!

ANSWER: I am not an expert in Kuwaiti law, and therefore I can only give you a response by analogy to other law systems with which I am familiar.

In the United States, a purchase money security interest is recorded through the department of motor vehicles, as you have indicated.    If the bank fails to record its interest, then so far as future purchasers of the vehicle are concerned, they are buying the car "free and clear."  If they buy the car without knowing about the bank's interest, the bank cannot get the car back from them.

But the person who got the loan(usually the owner of the car, of course) knows that the bank is entitled to an interest.  Furthermore, that person is the borrower and owes the money to the bank in any event.  I would suppose that transferring the car while knowing that the bank made a mistake might even be a crime(a species of fraud).  So it is not something to be taken lightly.

But the purchaser of the car, if innocent of knowledge, should be able to keep the car, notwithstanding the bank's error.

I hope that is helpful as a guideline.  But you should check with an attorney familiar with the law applicable to the transaction(the car and the PMSI).

---------- FOLLOW-UP ----------

thanks you sir for the informative answer. Yes I was reading about United States Business Law. Sir, if bank followed all the necessary steps to have security interest in car, but yet didn't get certificate of title from state office, then:

Does Bank has PMSI in the car?(in this case)

Secondly, certificate of title mean filing financing statement? I heard PMSI doesn't require filing. Please lightened this rule in my above case/

Thanks!
Nicholas
 
Posts: 49
Joined: Fri Jan 10, 2014 1:02 am

Pmsi In Car

Postby Hreinn » Wed Nov 30, 2016 6:14 am

The answer is as I described above.  The bank "has a security interest in the car" because the owner signed documents granting it.  Even if the bank failed to have its rights recorded on the certificate of title, it would have a right to sue the owner to have its security interest recognized and enforced.

The notation on the certificate of title is simply a means of notifying third parties of the bank's interest in the car(like a financing statement -- except that the notice of security interests in motor vehicles is not done by way of a financing statement but by notation on the certificate of title of the car).

So -- while the bank may have a security interest, if does it little good against persons who might purchase the car from the owner.  Such purchasers are not on notice of the banks rights and take free and clear.

Hope that helps -- I understand that it's a bit confusing -- but there's a difference between have an interest in a piece of property and having that right enforcible against the world.
Hreinn
 
Posts: 30
Joined: Sat Mar 29, 2014 6:50 pm

Pmsi In Car

Postby Matthieu » Fri Dec 02, 2016 7:42 pm

Hello Sir, I have a question regarding PMSI(purchase money security interest). I have read if we buy an automobile by loan, the Bank has no proper PMSI unless it gets Certificate of title from government office or state office. I want ask if bank doesn't do that then can we say that it has failed in proper filing of financing statement?

thanks!

ANSWER: I am not an expert in Kuwaiti law, and therefore I can only give you a response by analogy to other law systems with which I am familiar.

In the United States, a purchase money security interest is recorded through the department of motor vehicles, as you have indicated.    If the bank fails to record its interest, then so far as future purchasers of the vehicle are concerned, they are buying the car "free and clear."  If they buy the car without knowing about the bank's interest, the bank cannot get the car back from them.

But the person who got the loan(usually the owner of the car, of course) knows that the bank is entitled to an interest.  Furthermore, that person is the borrower and owes the money to the bank in any event.  I would suppose that transferring the car while knowing that the bank made a mistake might even be a crime(a species of fraud).  So it is not something to be taken lightly.

But the purchaser of the car, if innocent of knowledge, should be able to keep the car, notwithstanding the bank's error.

I hope that is helpful as a guideline.  But you should check with an attorney familiar with the law applicable to the transaction(the car and the PMSI).

---------- FOLLOW-UP ----------

thanks you sir for the informative answer. Yes I was reading about United States Business Law. Sir, if bank followed all the necessary steps to have security interest in car, but yet didn't get certificate of title from state office, then:

Does Bank has PMSI in the car?(in this case)

Secondly, certificate of title mean filing financing statement? I heard PMSI doesn't require filing. Please lightened this rule in my above case/

Thanks!
Matthieu
 
Posts: 51
Joined: Mon Jan 20, 2014 8:09 pm


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