Creditors Take Notice: Changes to House Bills 155 and 411

Two recent bills were signed into law following the 2020 Regular Session of the Kentucky Assembly which impact creditors. Creditors should be aware of these changes as they may limit ability to recover claims if ignored. House Bill 155 amends the time in which creditors have to present probate claims. House Bill 411 adopts new requirements to properly notate and perfect security interests on a certificate of title, and allows creditors to rely on the county of residence designated by debtors on notarized forms.

House Bill 155

House Bill 155 shortens the time creditors have to bring probate claims. House Bill 155 creates a new section of KRS Chapter 396 to provide that creditors have six months to bring claims following the appointment of a personal representative. The clerk of the probate court will publish notice to creditors pursuant to KRS 424.340. If a personal representative gives actual notice to a creditor, the creditor has 60 days to present a claim or will be forever barred. KRS 396.011 has also been amended to require that all claims against a decedent’s estate be brought within the earlier of eight months after the decedent’s death or the established time periods created through the new section of KRS Chapter 396. Previously, creditors had six months after the appointment of a personal representative, or if no personal representative had been appointed, two years, to bring a claim.

House Bill 411

House Bill 411 changes requirements for notation and discharge of security interests on certificates of title. Security interests are discharged by notation on the certificate of title, per KRS. 186A.190. A security interest is perfected when notation on the certificate of title occurs or is deemed perfected at the time the security interest attaches, per KRS 355.9-203, if in compliance with KRS 186A.195(5). For a security interest to be noted and perfected, or deemed perfected according to KRS 355.9-203, if in compliance with KRS 186A.195(A), the county clerk must receive a title lien statement, as well as:

• A description of the title vehicle with year, make, model, and vehicle identification number;
• The name of the secured party and relevant information; and
• A date and time-stamped entry of the notation of the security interest in the Automated Vehicle Information System (AVIS).

The previous statute did not require this mandatory information. The bill also protects creditors by adding that the county of residence designated by a debtor on any approved, notarized state form utilized in titling shall be relied upon, relieving creditors from possible third-party liability.