BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1515
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: eng
VERSION: 4/29/09
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: June 23, 2009
SUBJECT:
Vehicles: Electronic Lien and Title (ELT) program
DESCRIPTION:
This bill requires that by January 1, 2012, the Department of
Motor Vehicles (DMV) develop a mandatory Electronic Lien and
Title (ELT) program.
ANALYSIS:
Existing law prohibits driving, moving, or leaving standing upon
a public road or pubic parking facility a vehicle unless the
vehicle is registered with DMV. Upon registration, DMV issues a
certificate of ownership to the legal owner (e.g., the bank that
made the auto loan and therefore is the lienholder on the auto)
and a registration card to the owner. If there is no legal owner
(i.e., a person pays cash for a car), then DMV issues both the
certificate of title and the registration card to the owner.
A certificate of ownership includes the following information:
the date issued;
the name and residence or business address or mailing
address of the owner and of the legal owner, if any;
the registration number DMV assigned to the vehicle;
a description of the vehicle; and
provisions to notify DMV of a transfer of the title, to
apply to DMV for transfer of registration, and to disclose
the vehicle's odometer reading at time of transfer.
DMV operates a voluntary ELT program for lienholders that
provides an electronic ownership record in lieu of a paper
certificate of title. Under its ELT program, DMV suppresses the
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printing of paper titles for lienholders that choose to
participate, but a paper registration card is still issued to
the registered owner. DMV reports that approximately ten percent
of vehicles titled in the state are in its program.
Lienholders participating in the ELT program may initiate
various transactions to ELT vehicle records that are then
transmitted electronically to DMV's headquarters for processing.
For example, an ELT participant may under the program notify DMV
electronically that the registered owner has satisfied a lien
against the vehicle by paying off the auto loan. After receiving
this information, DMV would then create and mail out a paper
certificate of title to the vehicle owner.
This bill requires by January 1, 2012 the director of DMV to
develop a mandatory ELT program, if the director determines that
such a program is cost effective and, in consultation with
lienholders, to hold in electronic format all lienholders'
vehicle title information. The bill also allows DMV to establish
an auto loan business volume threshold level below which a
lienholder will not have to participate in the ELT.
COMMENTS:
1. Purpose . The author introduced this bill to reduce the
costs associated with processing paper vehicle titles with
liens by making the existing voluntary DMV ELT program
mandatory if DMV finds it cost effective to do so.
DMV reports that it launched the existing ELT program in
1989 to replace paper vehicle and vessel titles in order to
reduce its own costs and in response to requests from auto
lenders. ELT reduces DMV's costs by replacing paper titles
with electronic data thus eliminating the data entry and
processing of removing a lien and issuing a clean title,
reducing the data entry and processing of duplicate title
applications resulting from lost paper titles, reducing the
issuance of replacement paper titles to lienholders, and
reducing the chance for fraud by eliminating paper documents
that can be compromised.
ELT reduces lienholders' costs associated with paper titles,
including matching titles to loan data, storage of titles,
retrieving titles from file vaults, and executing lien
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releases and mailing of titles upon lien satisfaction.
According to the sponsor, VINteck, which provides electronic
lien handling services on a commercial basis for
lienholders, "The benefits to lienholders are reduction in
work effort, lower cost, no storage requirements, no postage
and better customer service by avoiding lost titles since
ELT cannot be lost. Much like e-mail has replaced written
letters, ELT is eliminating paper titles. The average cost
for tracking, handling and storing a title can range from $8
to $12. Using ELT can bring this figure down to about $2
per title."
2. Benefit to the sponsor . While at least three other firms
currently offer ELT services to lienholders, this bill
clearly increases the market for the sponsor's products and
services. In addition, it is likely that enactment of the
bill would spur the establishment of additional firms that
sell the services and software necessary to participate in
DMV's ELT program.
3. Other states . DMV reports that 14 other states currently
have ELT programs, including one state, Pennsylvania, with a
mandatory program, which has been in place for about one
year.
4. Author's amendments . The author will offer amendments in
committee to add licensed dealers and other stakeholders to
those the director of DMV shall consult in developing a
mandatory ELT program.
Assembly Votes:
Floor: 76 - 0
Appr: 15 - 0
Trans: 13 - 0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 17, 2009)
SUPPORT: VINtek (sponsor)
California New Car Dealers Association
OPPOSED: None received.