(1) The department, upon receiving an application for a certificate of title to a vessel or motor showing security interest on the vessel or motor, shall show upon the face of the certificate of title all security interest in the order of their priority as shown on the application. When a security interest exists, the application for a certificate of title must also contain the name and address of the secured party and the date and amount of the security interest.

(2) Security interest created after the original issue of title to the owner must be shown on the certificate of title. The owner shall surrender the original certificate of title to the department and file an application with the department containing the name and address of the secured party, the amount of the security interest, the date and payment of a filing fee. The department shall then issue a new certificate of title showing name and address of the secured party. The newly issued certificate of title shall be sent to the secured party.

For the purpose of recording a subsequent security interest, the department shall require any secured party to deliver the certificate of title to the department. Upon receipt of the certificate of title, completion of the forms and required fees, the department shall then issue a new certificate of title showing the security interest in the order of their priority according to the date of the filing of the application. The newly issued certificate of title shall be sent to the first secured party listed on the certificate of title.

(3) The certificate of title when issued by the department showing a security interest shall be adequate notice to the state, creditors and purchasers that a security interest exists. The recording or filing of the security interest in the county or city where the purchaser or debtor resides shall not be required.

(4) If application for the recordation of a security interest is filed in the principal office of the department within five (5) days from the date of the applicant’s purchase of the vessel or motor, it shall be valid to all persons as if the recordation had been done on the day the security interest was acquired.

(5) The security interest, except security interest in inventory held for sale, shown on the certificates of title issued by the department pursuant to applications for certificates shall have priority over any other liens or security interest however created and recorded, except for liens designated by the department.

(6) The certificate of title shall be delivered to the person holding the security interest having first priority. The title shall be retained by that lienholder until the entire amount of the security interest is fully paid by the owner. The certificate of title shall then be delivered to the secured party next in order of priority and so on, or, if none, then to the owner.

(7) Upon the satisfaction of a security interest, the secured party shall attach to the certificate of title a release of security interest or in whatever form as may be prescribed by the department. Within five (5) days the secured party shall mail or deliver the certificate of title to the owner and a copy of the security release, if required by the department. Upon request of the owner and upon receipt of a copy of the security release, if required, and the certificate of title, the department shall correct its records and issue a new certificate of title to the owner.

(8) It shall constitute a misdemeanor for a secured party who holds a security interest as provided for in this chapter to refuse or fail to surrender the certificate of title to the person to whom it is legally entitled within five (5) days after the security interest has been paid and satisfied. The misdemeanor is punishable as provided in Section 59-21-153(a).

(9) This section does not apply to any of the following: a lien given by statute or rule of law to a supplier of services or materials for the vessel or motor; a lien given by statute to the United States, a state or a political subdivision thereof; or any lien arising out of an attachment of a vessel or motor.