If the division of motor vehicles is not satisfied as to the ownership of the vehicle or that there are no undisclosed security interests in it, the division of motor vehicles may register the vehicle but shall either:
(1) Withhold issuance of a certificate of title until the applicant presents documents reasonably sufficient to satisfy the division of motor vehicles as to the applicant's ownership of the vehicle and that there are no undisclosed security interests in it; or
(2) As a condition of issuing a certificate of title, require the applicant to file with the division of motor vehicles a bond in the form prescribed by the division of motor vehicles and executed by the applicant, and either accompanied by the deposit of cash with the division of motor vehicles or also executed by a person authorized to conduct a surety business in this state. The bond shall be in the amount equal to one and one-half (1½) times the value of the vehicle, as determined by the division of motor vehicles. This amount will be conditioned to indemnify any prior owner and lienholder and any subsequent purchaser of the vehicle or person acquiring any security interest in it, and their respective successors in interest, against any expense, loss, or damage, including reasonable attorney's fees, by reason of the issuance of the certificate of title of the vehicle or an account of any defect in or undisclosed security interest upon the right, title, and interest of the applicant in and to the vehicle. Any interested person has a right of action to recover on the bond for any breach of its conditions, but the aggregate liability of the surety to all persons shall not exceed the amount of the bond. The bond, and any deposit accompanying it, shall be returned at the end of three (3) years or prior to that time if the vehicle is no longer registered in this state and the currently valid certificate of title is surrendered to the division of motor vehicles unless the division of motor vehicles has been notified of the pendency of an action to recover on the bond.
History of Section.
P.L. 1971, ch. 100, § 1.