The lien is paramount to all private liens or encumbrances of whatever character upon the vehicle and to the rights of any conditional vendor or any other holder of the legal title to such vehicle, with the following exceptions:

1. The lien shall not be enforceable against any vehicle which was transferred in good faith to a bona fide transferee before physical possession of the vehicle was taken by the State of Nevada pursuant to the lien.

2. The lien shall be subordinate to any lien of indebtedness secured by a security agreement which existed against a vehicle prior to the time when the lien provided by NRS 706.601 attached to such vehicle if:

(a) Such indebtedness was incurred in good faith to secure a portion of the purchase price of such vehicle;

(b) Such indebtedness is secured by a security agreement perfected as required by law; and

(c) Such security agreement, whether providing for a purchase money security interest or otherwise, was not given, directly or indirectly, to any officer or stockholder of a corporation having the lawful use or control of such vehicle.

3. Notwithstanding the provisions of subsection 2, the lien provided by NRS 706.601 shall be enforceable as to any equity which may remain in a vehicle subject to such lien after the encumbrance of any security interest has been removed by repossession and sale of such vehicle by the secured party, but no such sale, either public or private, may be had unless such secured party has served, by registered or certified mail, at least 5 days prior to the date set for sale, notice upon the Director of the Department of the time and place of such sale. The Department shall notify the secured party, if the name of the secured party is known to the Department, at the time the lien attaches to any vehicle, or as soon thereafter as the Department learns that the lien has attached.

(Added to NRS by 1971, 709)