Current through Register Vol. 49, No. 9, September, 2024
Pursuant to authority given the Commissioner of Revenues by
subsection of Section 200 Act 142 of 1949 (Ark. Code Ann. §§
27-14-403(b)), after the effective date This regulation, corporate surety bonds,
certificates of deposit with assignment and irrevocable which meet the
requirements of this regulation may be accepted under those circumstances where
a bond is authorized under the provisions of subsection (c) of section 1 of Act
1013 of 1993 [Ark. Code Ann. §§
27-14-409(c)
].
(1) Definitions:
(A) "Bond" means any corporate surety bond,
certificate of deposit or irrevocable letter of credit approved by the
Commissioner and given for the purpose of indemnifying any prior owner or
lienholder and any subsequent purchaser of a vehicle, or person acquiring any
security interest in it, and their respective successors in interest, heirs, or
assigns, against any expense, loss or damage, including reasonable attorney's
fees, by reason of the issuance of the certificate of title to the vehicle or
on account of any defect in or undisclosed security interest upon the right,
title and interest of the applicant in and to the vehicle.
(B) "Bonded Title" means a certificate of
title to a vehicle issued upon the condition that a bond is filed with the
Commissioner of Revenues pursuant to Act 1013 of 1993 [Ark. Code Ann. §§
27-14-409(c)
].
(C) "Insurer" means any person
with a valid certificate of authority, issued by the Arkansas Insurance
Commissioner which certificate grants the authority to become surety on
contracts in the State of Arkansas, or any other guarantor approved by the
Commissioner of Revenues.
(D)
"Vehicle" means any vehicle of a type required to be registered and titled in
Arkansas, and which is in the possession of and legally controlled by the
applicant for bonded title. This definition shall specifically exclude the
following:
(i) Vehicles issued a junking
certificate, or similarly branded certificate of title, as referenced in
subsection (c) of section 2. of Act 614 of 1993;
(ii) Vehicles for which a person holds a
storage or mechanic's lien under the provisions of Act 1000 of 1993, [Arkansas
Code Annotated §
27-50-1201, et.
seq.], or Arkansas Code Annotated §
18-45-201,
et. seq.;
(iii) Stolen
vehicles;
(iv) Vehicles involved in
ownership litigation.
(E) "Statement of fact" means a form
prescribed by the Commissioner, to be completed by the applicant for bonded
tide and filed with the Commissioner prior to the filing of a bond, so that a
determination can be made as to the eligibility of the applicant for issuance
of a bonded title.
(F) "Letter of
approval" means a letter issued by the Commissioner to the applicant for bonded
tide granting approval to file a bond and apply for registration and issuance
of a bonded tide, and establishing the amount of the bond to be
filed.
(2) After the
effective date of this regulation, any bond filed pursuant to Act 1013 of 1993
[Ark. Code Ann. §§
27-14-409(c)
] must guarantee payment, for a period of three (3) years from its effective
date, to any prior owner or lienholder and any subsequent purchaser of a
vehicle, or person acquiring any security interest in it, and their respective
successors in interest, heirs, or assigns, against any expense, loss or damage,
including reasonable attorney's fees, by reason of the issuance of the
certificate of title to the vehicle or on account of any defect in or
undisclosed security interest upon the right, tide and interest of the
applicant in and to the vehicle.
(3) A bond filed pursuant to Act 1013 of 1993
[Ark. Code Ann. §§
27-14-409(c)
] shall not be accepted unless it is a corporate surety bond, certificate of
deposit with assignment, or an irrevocable letter of credit filed with the
Commissioner within thirty (30) days from its effective date, for an amount
equal to one and one half (11/2) times the value of the vehicle as determined by
the Commissioner, and meets the following requirements:
(A) "Corporate Surety Bond": A corporate
surety bond shall:
(i) be on forms approved
by the Commissioner;
(ii) be issued
by an insurer;
(iii) be irrevocable
for a period three (3) years;
(iv)
be signed by the vehicle owner (applicant for bonded title to a vehicle), and
payable to the State of Arkansas upon presentation of a judgement issued by a
court of competent jurisdiction as a result of the issuance of a bonded
title;
(v) be signed by the insurer
or its licensed agent or broker with power of attorney to act on behalf of the
insurer and countersigned as otherwise required by law;
(vi) be delivered to the Commissioner, and
accompanied by:
(a) an application for
registration and issuance of a certificate of title to the vehicle signed by
the vehicle owner;
(b) a letter
from the Commissioner granting authorization to apply for a bonded
title;
(c) the original power of
attorney of the person executing on the behalf of the insurer, if
applicable;
(d) any additional
documentation otherwise necessary to comply with specific statutory
requirements for registration and issuance of a certificate of title to a
vehicle;
(e) the payment of all
requisite fees and taxes for the registration and issuance of a certificate of
title to a vehicle.
(B) "Certificate of Deposit with Assignment":
(i) The certificate of deposit and assignment
shall both be on forms approved by the Commissioner.
(ii) The certificate of deposit shall:
(a) be signed by the assignor;
(b) be issued by a bank or savings and
loan;
(c) be irrevocable for a
period three (3) years,
(iii) The assignment shall:
(a) be signed by the assignor;
(b) be acknowledged by the financial
institution;
(c) contain an
irrevocable appointment of the Commissioner which allows him to endorse the
certificate of deposit and apply the proceeds to any and all valid claims
against the bonded title, as determined by a court of competent
jurisdiction;
(e) provide the
assignment of the certificate of deposit is to be held by the Commissioner for
a period of three (3) years from the date of delivery to the
Commissioner.
(iv) The
certificate of deposit and assignment shall be delivered to the Commissioner,
and accompanied by:
(a) an application for
registration and issuance of a certificate of title to the vehicle signed by
the vehicle owner;
(b) a letter
from the Commissioner granting authorizatio to apply for a bonded
title;
(c) any additional
documentation otherwise necessary to comply with specific statutory
requirements for registration and issuance of a certificate of title to a
vehicle;
(d) the payment of all
requisite fees and taxes for the registration and issuance of a certificate of
title to a vehicle.
(C) "Irrevocable Letter of Credit": An
irrevocable letter of credit shall:
(i) be in
a form as prescribed by the Commissioner;
(ii) be issued by a bank or savings and
loan;
(iii) be an irrevocable
letter of credit;
(iv) be titled or
conspicuously state that it is an irrevocable letter of credit;
(v) state that it may be drawn against to
satisfy any judgement issued by a court of competent jurisdiction as a result
of the issuance of a bonded title;
(vi) state that any draft drawn by the
Commissioner against the letter of credit is payable upon presentation of a
judgement issued by a court of competent jurisdiction as a result of the
issuance of a bonded title;
(vii)
be irrevocable for a period of three (3) years from the date it is delivered to
the Commissioner;
(viii) be
delivered to the Commissioner, and accompanied by:
(a) an application for registration and
issuance of a certificate of title to the vehicle signed by the vehicle
owner;
(b) a letter from the
Commissioner granting authorization to apply for a bonded title;
(c) any additional documentation otherwise
necessary to comply with specific statutory requirements for registration and
issuance of a certificate of title to a vehicle;
(d) the payment of all requisite fees and
taxes for the registration and issuance of a certificate of title to a
vehicle.
(4) Procedure for applying for issuance of a
bonded title: When a bonded title transaction is received by a State Revenue
Office, the transaction should be examined to ensure that:
(A) The corporate surety bond, certificate of
deposit with assignment or irrevocable letter of credit has been issued for an
amount equal to or exceeding the amount determined by the Department.
(B) The bond is effective for a period of
three (3) years from the date of issuance.
(C) The application for bonded tide has been
made within 30 days from the effective date of the bond.
(D) An application presented more than 30
days after the effective date of the bond shall not be accepted.
(E) The vehicle description (year, make,
model, vehicle identification number, body style) reflected on the application
matches the vehicle description -reflected on the bond.
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