November 26, 1984

Ms. Marlene Wolfe
Register of Deeds 
Minnehaha County Courthouse 
Sioux Falls, South Dakota 57102

OFFICIAL OPINION NO. 84-45

Proper procedure for filing a mechanic's lien

Dear Ms. Wolfe:

You have requested an official opinion based upon the following factual situation:

FACTS: 

County Registers of Deeds throughout the State presently follow varying procedures for filing mechanic's liens against titled motor vehicles.  If a titled vehicle has a first lien noted on the title, it is possible to ask the first lienholder to surrender title to note the mechanic's lien as a second lien on the title; however, not all County Registers do this.  The fee for this is $2.00 and is charged to the individual who files the mechanic's lien. 

If there is no feasible way for the Register of Deeds to obtain the title to make the proper notations, or if a county does not make a practice of attempting to obtain the title, some Registers file the lien under personal property in the Register's U.C.C. filing department.  In this instance the non-standard filing fee of $7.00 is assessed against the individual who presents the mechanic's lien for filing. 

Other Registers of Deed file the mechanic's lien in the Mechanic's Lien register only.  This is filed against the debtor's name and a $3.00 fee is charged.  Some other counties have combined the filings in the Mechanic's Lien register and on the title, if possible, and charged the combined fees.

Based upon the above facts, you ask the following questions:

QUESTIONS: 

1.  What is the correct procedure to follow in filing a Mechanic's Lien against a titled motor vehicle? 

2.  What fees should be charged? 

3.  What is the correct procedure for recording a mechanic's lien against non-titled personal property, and what fees should be charged?

IN RE QUESTION NO. 1:

SDCL 32-3-38 provides: 

The holder of a chattel mortgage, trust receipt, conditional sales contract, mechanic's lien or similar instrument, upon presentation of such instrument to the office of the county register of deeds holding the duplicate certificate of title of the motor vehicle, trailer or semitrailer, together with the certificate of title and the fee prescribed by this chapter, may have a notation of such lien made on the face of such certificate of title.  The county register of deeds shall enter said notation and the date thereof over the signature of such office, and also note such lien and the date thereof on the duplicate of same file, and on that day shall notify the department of public safety, which shall do likewise. The county register of deeds shall also indicate by appropriate notation and on  such instrument itself the fact that such lien has been noted on the certificate of title.

Thus, in answer to your first question, the correct procedure to follow in filing a mechanic's lien against a titled motor vehicle is to place a notation of such lien upon the holder of the lien's duplicate Certificate of Title.  The Register of Deeds is also required to place a notation of the lien on the duplicate Certificate of Title filed in his or her office.  Further, the Register of Deeds is required to notify the Department of Commerce and Regulation (formerly Department of Public Safety) of the recording of such a lien, so the Department may make a notation on the Certificate of Title filed with it.

SDCL 32-3-43 provides: 

The county register of deeds, upon receipt of a lien or title instrument duly executed in the manner prescribed by law governing such instruments, together with the fee prescribed for notation thereof, shall notify the first lien holder to deliver to the county register of deeds, within fifteen days from the date of notice, the certificate of title to permit notation of such junior lien, and, if necessary, the issuance of a new certificate of title provided in § 32-3-36.  After such notation of lien the county register of deeds shall deliver the certificate of title to the first lien holder.  The holder of a certificate of title who refuses to deliver a certificate of  title to the county register of deeds for the purpose of showing the junior lien on such certificate of title within fifteen days from the date when notified to do so by the county register of deeds, shall be liable for damages to such junior lien holder for the amount of damages such junior lien holder suffered by reason of the holder of the certificate of title refusing to permit the showing of such lien on the said certificate of title. (Emphasis added.)

The above provision requires the Register of Deeds to notify the first lien holder of his or her requirement to present a Certificate of Title so that subsequent liens may be recorded on the instrument.  The statute further provides for the assessment of damages against any lien holder who refuses to produce the Certificate of Title as requested.

It is the duty of the Register of Deeds to record a mechanic's lien on the Certificate of Title.  Furthermore, he or she must obtain the Certificate in the event junior liens are presented to be recorded.  The above statutes require that this procedure be followed, and failure to comply may subject the first lien holder to any damages accruing as a result of his failure to produce the necessary Certificate of Title.

IN RE QUESTION NO. 2:

SDCL 32-3-45 states: 

The county register of deeds shall charge a fee of two dollars for each notation of any lien on a certificate of title and shall charge a fee of one dollar for each notation of the discharge of such lien, to be accounted for as other fees of their office.

Pursuant to the above statute, two dollars shall be charged for filing a mechanic's lien against a titled motor vehicle.

IN RE QUESTION NO. 3:

SDCL 44-11-3 provides for the filing of a mechanic's lien against personal property with the Register of Deeds.  It provides: 

Notwithstanding the voluntary surrender of other loss of possession of the property on which such lien is claimed, the person entitled thereto may preserve such lien, if at any time within one hundred twenty days after such surrender or loss of possession he gives notice of his lien by proper filing thereof in the office of the register of deeds in accordance with § §  44-2-3 to 44-2-9, inclusive, and such liens shall be valid against everyone except a purchaser or encumbrancer in good faith, without notice, and for value whose rights were acquired prior to the filing of such statement.

The procedure for filing the mechanic's lien against personal property,  outlined under Chapter 44-2, requires the following steps be undertaken. First, public record notice must be given pursuant to SDCL 44-2-3.  This provision provides: 

In all cases where no other provision is made by statute for giving public record notice of any claim of lien on personal property any person claiming such lien may give public record notice thereof by sworn statement executed in writing stating: 

(1)  The names and addresses of the owner of the property and of the lien claimant; 

(2)  A description of the property sufficient to identify it; 

(3)  The approximate location of the property; 

(4)  The date on which the lien is claimed to have arisen; 

(5)  The amount claimed as a lien, and if the lien is one, which may increase by future keep, care, or other transactions related to the property, the probable amounts by which it will increase; 

(6)  The circumstances out of which the lien is claimed to have arisen and the circumstances, if any, under which its future accumulations may arise, sufficient to show the legal or contract right to such lien and its accumulations.

SDCL 44-2-4 requires the person filing the lien statement send a copy of said statement to the owner of the property.  It states:  

Before filing such lien statement, the person claiming the lien shall mail to the property owner at his last known post-office address, by registered or certified mail, a copy of such lien statement and the post-office receipt for such mailing shall be attached to the lien statement and filed in the office of the register of deeds.

Once the person wishing to file a mechanic's lien has met all statutory obligations, the office of the register of deeds is then required, pursuant to SDCL 44-2-5, to do the following: 

The sworn statement of such claim of lien together with post-office receipt for mailing as required in § 44-2-4 may be filed in the office of the register of deeds of the county in which the property is located at the time of such filing and the register of deeds shall file and index it in the personal property index under the names of the property owner and the lien claimant, both alphabetically arranged, and thereafter it shall have the same effect and term of notice as a chattel mortgage duly filed. 

The fees of registers of deeds in such cases shall be same as fees pertaining to chattel mortgages.

Assessment of fees to be charged by the office of the register of deeds is determined pursuant to SDCL 44-2-5 and 7-9-15.  SDCL 44‑2‑4 provides that the assessed fees be the same as those fees pertaining to chattel mortgages.  Pursuant to SDCL 7-9-15(5) such fee would be one dollar.

Thus, in answer to your question, the person who files the lien statement must first send a copy of said statement to the property owner.  Second, the person filing the lien must file the statement, along with the post-office receipt, with the office of the register of deeds.  The procedure for filing the lien upon personal property mandates that the sworn statement, along with the post-office receipt for mailing, be filed in the register of deeds of the county in which the property is located at the time of filing.  The register of deeds shall alphabetically file and index the lien in the personal property index under the names of the property owner and the lien claimant.  A one dollar filing fee shall be assessed.

Respectfully submitted,

Mark V. Meierhenry
Attorney General