(1) If the interest of an owner in a vehicle passes to another other than by voluntary transfer, the transferee shall, except as provided in subsection (2) of this section, promptly mail or deliver to the Department of Motor Vehicles the last certificate of title, if available, proof of the transfer and his application for a new certificate in the form the Department prescribes.

(2) If the interest of the owner is terminated or the vehicle is sold under a security agreement by a lienholder named in the certificate of title, or by foreclosure of a statutory lien or sale pursuant to § 29-15-10, the transferee shall promptly mail or deliver to the department the last certificate of title or order of court pertaining to sale, his application for a new certificate in the form the department prescribes and an affidavit made by or on behalf of the lienholder that the vehicle was repossessed and that the security interest of the owner was lawfully terminated or sold pursuant to the terms of the security agreement, or by foreclosure of a statutory lien. If the lienholder succeeds to the interest of the owner and holds the vehicle for resale, he need not secure a new certificate of title but, upon transfer to another person, shall promptly mail or deliver to the transferee or to the department the certificate, affidavit and other documents required to be sent to the department by the transferee, and the department shall, upon request, issue a new title free and clear of prior liens and encumbrances.