New York Codes, Rules and Regulations
Title 3 - BANKING
Legal Interpretations
LI 6 - Other Licensees
Section LI 6.4 - Preemption of part of banking law section 352(e) by section 2125(c) of the vehicle and traffic law

Universal Citation: 3 NY Comp Codes Rules and Regs ยง LI 6.4

Current through Register Vol. 46, No. 12, March 20, 2024

(a) The Banking Department was asked whether section 2125(c) and section 2123 of the Vehicle and Traffic Law, which became effective on July 1, 1972, impliedly repealed section 352(e) of the Banking Law, which permits a licensed lender to charge a borrower the cost of filing fees for the perfection of a lien on an automobile or to include it in the lender's charge to the borrower.

(1) Section 2123 of the Vehicle and Traffic Law provides that the method provided in this article of perfecting and giving notice of security interests subject to this article is exclusive. Security interests subject to this article are hereby exempted from the provisions of law which otherwise relate to the perfection of security interests.

(2) On the subject of fees, section 2125(c) directs that the fee for filing a notice of security interest shall be paid by the party secured and such fee shall not be charged to the owner in any manner.

(b) The quoted provisions have not been the subject of judicial construction, but a literal reading of the statutory language indicates that the Legislature intended for them to be exclusive. The filing fee for perfection of a lien on a vehicle must be paid by the "party secured", which, in this case, is the lender. An owner of the vehicle may not be charged for the cost of filing the notice of security. Section 2101(g) defines "owner" to mean "a person, other than a lienholder, having the property in or title to a vehicle". Consequently, a lienholder cannot be the "owner" of a vehicle.

(c) If the borrower is the owner of the automobile which is the subject of the security notice, there will be a clear conflict between section 2125(c) of the Vehicle and Traffic Law and section 352(e) of the Banking Law.

(d) The laws enacting sections 2123 and 2125(c) of the Vehicle and Traffic Law contain no express repeal of section 352(e). Whether or not they impliedly repealed it depends on the legislative intent. It should be noted, in this connection, that an implied repeal of a special law, by a subsequent general statute, is not to be presumed, Where the two statutes are so completely inconsistent that they cannot operate together, however, an implied repeal will be deemed to occur.

(e) In this case the Legislature has clearly indicated its intent in the statute itself by providing in section 2123 of the Vehicle and Traffic Law that the procedure set forth therein shall be exclusive, reflecting an intent to render all prior inconsistent provisions inapplicable. Section 2125(c)'s directive that the filing fee shall be paid by the party secured and not charged to the owner is patently inconsistent with section 352(e). To the extent that section 352(e) of the Banking Law is not in accord with section 2125(c) of the Vehicle and Traffic Law, therefore, it has been abrogated.

(f) As a result, it is no longer permissible for a licensed lender to charge the costs of filing a notice of security interest on a post 1972 model automobile to the borrower/owner.[FN*]

[FN*] § 2102(a)(10) excludes from the new law any vehicle manufactured or assembled prior to January 1, 1973 and any designated as a 1972 or earlier model.

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