(1) Except as provided in subsection (5) of this section, the exclusive means for perfecting a security interest in a vehicle is by application for notation of the security interest on the title in accordance with this section. The application may accompany the application for a title or may be made separately at any time prior to issuance of title and must be accompanied by evidence of ownership as defined by the Department of Transportation by rule unless the department is in possession of evidence of ownership when it receives the application. If title to the vehicle has been issued in a form other than a certificate, and the title reflects a security interest, the application for perfection shall include authorization from the previous security interest holder for the new security interest to be recorded on the title. Authorization under this subsection is not required if:

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(a) A release of interest is submitted by the prior security interest holder or the department is otherwise satisfied that the prior holder no longer holds an interest or is otherwise not entitled to title to the vehicle;

(b) The security interest is being added to the title in conjunction with the cancellation of previous title or other action the department takes to correct ownership information reflected on a title; or

(c) Title is being transferred by operation of law.

(2) When the department processes an application for a security interest the department shall mark on the application or otherwise indicate on the record the date the application was first received by the department. The department shall determine by rule what constitutes receipt of an application for purposes of this subsection.

(3) If the department has the evidence required by subsection (1) of this section and if the application contains the name of each owner of the vehicle, the name and address of the secured party and the vehicle identification number of the collateral, the security interest is perfected as of the date marked on the application or indicated in the record by the department. If the application does not contain the information required by this subsection, or if the department does not have the required evidence, the department shall indicate on the application or on the record that the date placed on the application or the record pursuant to subsection (2) of this section is not the date of perfection of the security interest.

(4) The security interest remains effective until released or terminated by the secured party.

(5) A security interest in a vehicle may not be perfected as described under this section but is subject to the perfection provisions under ORS Chapter 79 if:

(a) The debtor who granted the security interest is in the business of selling vehicles and the vehicle constitutes inventory held for sale or lease; or

(b) The vehicle is exempt from titling requirements under ORS § 803.030. [1987 c.750 § 2; 1989 c.148 § 13; 1993 c.233 § 31; 2001 c.445 § 184; 2001 c.675 § 11a; 2003 c.655 § 104; 2012 c.12 § 23]