(1) withhold issuance of a certificate of title until the applicant presents documents reasonably sufficient to satisfy the Commissioner as to the applicant's ownership of the vessel, snowmobile, or all-terrain 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 Commissioner, a bond in the form prescribed by the Commissioner and executed by the applicant, and either accompanied by the deposit of cash with the Commissioner or also executed by a person authorized to conduct a surety business in this State. The bond shall be in an amount equal to one and one-half times the value of the vessel, snowmobile, or all-terrain vehicle as determined by the Commissioner and conditioned to indemnify any prior owner and lienholder and any subsequent purchaser of the vessel, snowmobile, or all-terrain 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 vessel, snowmobile, or all-terrain 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 vessel, snowmobile, or all-terrain vehicle. Any such 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 years or prior thereto if the vessel, snowmobile, or all-terrain vehicle is no longer registered in this State and the currently valid certificate of title is surrendered to the Commissioner, unless the Commissioner has been notified of the pendency of an action to recover on the bond. (Added 1987, No. 152 (Adj. Sess.), § 1; amended 2001, No. 107 (Adj. Sess.), § 10.)