(a) If the required security for any vehicle lapses at any time, the registration of that vehicle:

(1) Is suspended automatically as of the date of the lapse effective not later than 60 days after notification to the Administration that the lapse has occurred; and

(2) Remains suspended until:

(i) The required security is replaced and the vehicle owner submits evidence of replaced security on a form as prescribed by the Administration and certified by an insurer or insurance producer; and

(ii) Any uninsured motorist penalty fee assessed is paid to the Administration.

(b) (1) Except as provided in paragraph (2) of this subsection, each insurer or other provider of required security immediately shall notify the Administration electronically of those terminations or other lapses that are final.

(2) Each insurer or other provider of required security for a vehicle registered as a Class B (for hire) vehicle under Title 13 of this article shall notify the Administration within 45 days of a termination or other lapse that is final and occurs anytime after the required security is issued or provided.

(c) On receipt of a notice under subsection (b) of this section, the Administration shall:

(1) Make a reasonable effort to notify the owner of the vehicle that his registration has been suspended; and

(2) Provide electronically the information contained in the notice of the suspension to the Uninsured Division of the Maryland Automobile Insurance Fund.

(d) (1) Within 48 hours after an owner is notified by the Administration of the suspension of registration, the owner shall surrender all evidences of that registration to the Administration.

(2) If the owner fails to surrender the evidences of registration within the 48-hour period, the Administration:

(i) Shall attempt to recover from the owner the evidences of registration; and

(ii) May suspend his license to drive until he returns to the Motor Vehicle Administration the evidences of registration.

(3) The Administration may enter into contracts with private parties to procure the services of independent agents to assist in the recovery of the evidences of registration as authorized in paragraph (2) of this subsection.

(e) (1) (i) 1. Except as provided in subparagraphs (iv) and (v) of this paragraph, in addition to any other penalty provided for in the Maryland Vehicle Law, if the required security for a vehicle terminates or otherwise lapses during its registration year, the Administration may assess the owner of the vehicle with a penalty of $150 for each vehicle without the required security for a period of 1 to 30 days.

2. If a fine is assessed, beginning on the 31st day the fine shall increase by a rate of $7 for each day.

(ii) Each period during which the required security for a vehicle terminates or otherwise lapses shall constitute a separate violation.

(iii) The penalty imposed under this subsection may not exceed $2,500 for each violation in a 12-month period.

(iv) The Administration may not assess a penalty under this subsection if:

1. The registration plates of the vehicle are returned to the Administration within 10 days after the termination or lapse of the required security, as shown by the records of the Administration; and

2. A. The certificate of title for the vehicle has been transferred to a new owner;

B. The registered owner has moved out-of-state and the registration plates are returned by mail;

C. A salvage certificate has been issued for the vehicle; or

D. A licensed dealer has taken possession of the vehicle with an obligation to return the registration plates.

(v) Before the Administration may assess a penalty under this subsection, the Administration shall first verify that the registration plates for the vehicle were not returned to the Administration within 10 days after the termination or lapse of the required security.

(2) (i) Except as provided under paragraph (3) of this subsection, a penalty assessed under this subsection shall be paid as follows:

1. 70% to be allocated as provided in subparagraph (ii) of this paragraph; and

2. 30% to the Administration, which may be used by the Administration, subject to subsection (f) of this section, to provide funding for contracts with independent agents to assist in the recovery of evidences of registration as authorized in subsection (d)(3) of this section.

(ii) For each fiscal year beginning on or after July 1, 2014, the percentage of the penalties specified under subparagraph (i)1 of this paragraph shall be allocated among the Safe Schools Fund, the Vehicle Theft Prevention Fund, the Maryland Automobile Insurance Fund, and the General Fund as follows:

1. $600,000 to the Safe Schools Fund;

2. $2,000,000 to the Vehicle Theft Prevention Fund;

3. To the Maryland Automobile Insurance Fund, the amount distributed to the Maryland Automobile Insurance Fund in the prior fiscal year under the provisions of this paragraph adjusted by the change for the calendar year preceding the fiscal year in the Consumer Price Index – All Urban Consumers – Medical Care as published by the United States Bureau of Labor Statistics; and

4. The balance to the General Fund.

(3) Beginning July 1, 2018, any uninsured motorist penalties the Administration receives under the Program to Incentivize and Enable Uninsured Vehicle Owners to Be Insured established under § 20-612 of the Insurance Article shall be paid to the Uninsured Division of the Maryland Automobile Insurance Fund.

(4) If the Administration assesses a vehicle owner, co-owner, or lessee with a penalty under this subsection, the Administration may not take any of the following actions until the penalty is paid:

(i) Reinstate a registration suspended under this subsection;

(ii) Except for a temporary registration as provided under § 13-602(a)(2) of this article, issue a new registration for any vehicle that is owned, co-owned, or leased by that person and is titled after the violation date; or

(iii) Renew a registration for a vehicle that is owned, co-owned, or leased by that person.

(5) (i) In this paragraph, “family member” means any individual whose relationship to the vehicle owner is one of those listed under § 13-810(c)(1) of this article as being exempt from paying the excise tax imposed on the transfer of a vehicle.

(ii) The monetary penalties provided in this subsection may not be avoided by transferring title to the vehicle.

(iii) Except as provided in paragraph (1)(iv) and (v) of this subsection, regardless of whether money or other valuable consideration is involved in the transfer, if title to a vehicle is transferred by an individual who has violated this subtitle to a family member, any suspension of the vehicle’s registration that occurred before the transfer shall continue as if no transfer had occurred and a new registration may not be issued until the penalty fee is paid.

(6) An amount equal to the monetary penalties paid to the Administration under paragraph (2) of this subsection may be used by the Administration only for the enforcement of this subtitle.

(f) From the amount distributed to the Administration under subsection (e)(2)(i)2 of this section, expenditures to fund contracts entered into under subsection (d)(3) of this section:

(1) May not exceed $1,000,000 in any fiscal year; and

(2) May be made only:

(i) Pursuant to an appropriation approved by the General Assembly in the annual State budget; or

(ii) Through the budget amendment procedure provided for in § 7-209 of the State Finance and Procurement Article, provided that:

1. The budget amendment and supporting information have been submitted to the budget committees for review and comment; and

2. At least 45 days have elapsed from the time the budget amendment and supporting information were submitted to the budget committees.