In this subtitle, “perfected”, as used in reference to a security interest, means that it is valid against third parties generally, subject only to specific statutory exceptions. This subtitle does not apply to or affect: Any lien given by statute or rule of law to a supplier of services or materials for a vehicle; Any lien given by statute to the United States, this State, or any political subdivision of this State; Any security interest in a vehicle during any period in which the vehicle is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling vehicles; Any lien arising out of an attachment of a vehicle; Any security interest claimed on proceeds, as that term is defined in Title 9 of the Commercial Law Article (Maryland Uniform Commercial Code -- Secured Transactions), if the original security interest did not have to be noted on the certificate of title in order to be perfected; or Any vehicle for which a certificate of title is not required under this title.

Unless excepted by § 13-201 of this subtitle, a security interest in a vehicle is not valid against any creditor of the owner or any subsequent transferee or secured party unless the security interest is perfected as provided in this subtitle. A security interest is perfected by: Delivery to the Administration of every existing certificate of title of the vehicle and an application for certificate of title on the form and containing the information about the security interest that the Administration requires; and Payment of a filing fee established by the Administration, which is in addition to any other fees that apply under the Maryland Vehicle Law. The security interest is perfected at the time of the delivery and payment. If a vehicle already is subject to a security interest when brought into this State, the validity of that security interest in this State is determined by the law (including the conflict of law rules) of the jurisdiction where the vehicle was located when the security interest attached, subject to the provisions of this subsection. If, at the time the security interest attached, the parties to the transaction understood that the vehicle would be kept in this State, and if, within 30 days after the security interest attached, the vehicle was brought into this State for purposes other than transportation through this State, the validity of the security interest in this State is determined by the laws of this State. If, before the vehicle was brought into this State, the security interest already was perfected under the laws of the jurisdiction where the vehicle was located when the security interest attached, the following rules apply: If the name of the secured party is shown on an existing certificate of title issued by that jurisdiction, the security interest continues perfected in this State; and If the name of the secured party is not shown on an existing certificate of title issued by that jurisdiction and if the law of that jurisdiction does not provide for certificates of title disclosing security interests, the security interest continues perfected in this State for 4 months and thereafter if, within the 4-month period, it is perfected in this State, but this security interest also may be perfected in this State after the expiration of the 4-month period, in which case perfection dates from the time of perfection in this State. If, before the vehicle was brought into this State, the security interest was not perfected under the law of the jurisdiction in which the vehicle was located when the security interest attached, it may be perfected in this State, in which case perfection dates from the time of perfection in this State. A secured party under this subtitle may obtain from the Administration a duplicate of the security interest filing as provided in § 13-953 of this title. Priority of a security interest in a vehicle perfected as provided under this section is governed by Title 9 of the Commercial Law Article, including § 9-317(e).

If an owner creates a security interest in a vehicle, the provisions of this section apply. The owner immediately shall execute the application in the space provided for this purpose on the certificate of title or on the separate form that the Administration otherwise requires, naming the secured party on the certificate of title and showing the name and address of the secured party, the amount of the security interest, and the date of his security agreement. The owner immediately shall deliver the certificate of title and application to the Administration. At the time of delivery of the documents required by this section to the Administration, the secured party shall pay to the Administration the same filing fee as is required for perfection of the security interest under § 13-202 of this subtitle. The security interest is perfected at the time of its creation, if the delivery and payment to the Administration are completed within 10 days of the date of its creation. Otherwise, the security interest is perfected at the time of the delivery and payment. On receipt of the certificate of title, the application, and the required filing fee, the Administration shall: Endorse the existing certificate of title or a new certificate issued by it with the name and address of each secured party; and Deliver the endorsed certificate of title to the owner named on it.

A secured party may assign, absolutely or otherwise, any part of his security interest in a vehicle to a person other than its owner, without affecting the interest of the owner or the validity of the security interest. However, any person without notice of the assignment is protected in dealing with the secured party as the holder of the security interest, and the secured party remains liable for any obligations as secured party until the assignee is named as secured party on the certificate of title. The assignee shall deliver to the Administration the certificate of title, if available, and an assignment by the secured party named in the certificate of title in the form that the Administration requires, accompanied by the same filing fee as is required for perfection of the security interest under § 13-202 of this subtitle. The assignee’s security interest is perfected at the time of its creation, if the delivery and payment to the Administration are completed within 10 days of the date of its creation. Otherwise, the security interest is perfected at the time of the delivery and payment.

When a security interest in a vehicle is satisfied, the secured party shall execute a release of the security interest on the form that the Administration requires. When a security interest in a vehicle is satisfied, the secured party shall immediately deliver copies of the release to: The owner; The Administration; and A dealer licensed under Title 15, Subtitle 3 of this article who, on behalf of the owner, pays off the security interest if the owner authorizes the secured party in writing to deliver a copy of the release to the dealer. After it receives a release and the certificate of title, the Administration shall release the secured party’s right on the certificate of title or issue a new certificate of title. If, after notice to all interested parties and a hearing, the Administration determines that an indebtedness does not constitute a security interest, it shall: Release the indebtedness on the certificate of title; or Issue a new certificate of title and deliver the certificate to the owner. Any person aggrieved by the decision of the Administration may appeal in accordance with the provisions of the Administrative Procedure Act.

On written request of the vehicle owner, a secured party named in a certificate of title shall disclose any pertinent information as to the security agreement and the indebtedness secured, as provided in § 9-208 of the Commercial Law Article.

The method provided in this subtitle of perfecting and giving notice of security interests is exclusive.

The Administration shall maintain an Assurance Fund and deposit in it the filing fees collected under this subtitle. When the Assurance Fund reaches $25,000, any money in excess of that amount shall be transferred to the Transportation Trust Fund.

If an omission or error in the filing, recording, or indexing of a security interest has been made by an employee of the Administration in the course of employment and, as a result of the omission or error, any interested person has sustained loss or damage, the person may file a claim with the Administration for payment of the loss or damage out of the Assurance Fund maintained under § 13-209 of this subtitle. The claim for payment shall include a request for a hearing on the matter and shall be made in the manner and on the form that the Administration requires. A claim for payment under this section may not be made unless it is filed with the Administration within 3 years from the date the cause of action arose. The amount of payment made for a claim under this section may not exceed $100,000. Payment for a single claim may not be made from both the Assurance Fund and from the State Insurance Trust Fund under § 12-104 of the State Government Article. After notice to all interested parties and a hearing on the claim, the Administration may: Order that any loss or damage sustained by the claimant be paid out of the Assurance Fund, subject to the limitations set forth in this section; or Order that the claim be dismissed and deny payment of the claim. Any aggrieved party to a hearing under this section may appeal from the decision of the Administration as follows: To the circuit court for the county in which the party resides or has his principal place of business; or If the party does not reside or have a principal place of business in this State, to the Circuit Court for Anne Arundel County. The circuit court to which an appeal is made under this section has jurisdiction to examine the facts of the case and to determine if the claimant is entitled under this section to recover for any loss or damage. The Administration shall pay the amount of any judgment recovered against the Assurance Fund up to the amount of the security interest to which the claim relates. The Assurance Fund is not liable under any circumstances for: Any loss or damage that exceeds the amount of the security interest to which the claim relates; or Any loss or damage that results from: The claimant’s breach of any trust, whether expressed, implied, or constructive; The improper use of the seal of any corporation to deal with the property or interest involved or to execute or take the benefit of the instrument recorded; or The recording of an instrument executed by a person under legal disability, unless the fact of the disability is disclosed on the instrument. If, in an appeal against the Administration, judgment is given in favor of the Administration or the appeal is dismissed at the request of the claimant, the claimant shall pay the full costs of the appeal.

In this section, “terminal rental adjustment clause” means a provision in a contract permitting or requiring the rental price of a motor vehicle or trailer to be adjusted either upward or downward by reference to the amount realized upon sale or other disposition of the motor vehicle or trailer. Nothing in this section exempts a motor vehicle or trailer from the payment of any fees or taxes required at the time of titling a vehicle under the Maryland Vehicle Law. Notwithstanding any other provision of law, in the case of a motor vehicle or trailer that is not leased, or used, primarily for personal, family, or household purposes, a transaction does not create a sale or security interest merely because the contract on which the transaction is based contains a terminal rental adjustment clause.