Department of Revenue
Georgia law does not permit a certificate of title for a motor vehicle to be held in the name of a business trust.
You have asked for an Attorney General's opinion regarding the Revenue Commissioner's ("Commissioner") authority to issue motor vehicle titles in the name of a business trust. The Motor Vehicle Division ("MVD") of the Department of Revenue and the Department of Law have received inquiries from numerous motor vehicle financing entities regarding this issue.
It appears that several financial entities are creating business trusts into which vehicle leases and titles are pooled. The pooled leases are used to raise capital for the financial entities. By retaining the record ownership of the vehicles in the trust, investors are not required to transfer the title, or to record their security interest, each time the projected income stream from the leases is transferred or used as security by a different investor.
The Motor Vehicle Certificate of Title Act, O.C.G.A. § 40-3-1 ("Act") requires, with certain exceptions, any person owning and operating a vehicle in the State of Georgia to obtain a certificate of title from the Commissioner. See generally Grange Mut. Cas. Co. v. King, 174 Ga. App. 716 (1985). Its purpose is to provide a comprehensive system for the central recordation of ownership, security interests, and liens in all motor vehicles registered and regularly used in this state. First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284 (1969).
Official Code of Georgia Annotated § 40-1-1(39) defines "Owner" as
a person, other than a lienholder or security interest holder, having the property in or title to a vehicle. The term includes a person entitled to the use and possession of a vehicle subject to a security interest in or lien by another person but excludes a lessee under a lease not intended as security.
"Person" is defined as a "natural person, firm, copartnership, association, or corporation." O.C.G.A. § 40-1-1(43).
Several statutory definitions of "person" and "owner" recognize a "trust" and "business trust" as a legal entity. See generally O.C.G.A. §§ 3-1-2, 33-34-1, 48-1-2. However, the definition of person applicable to motor vehicle titles does not identify either a "trust" or "business trust" as an entity to which a motor vehicle can be titled.
Several of the financial entities contacting the Department of Law have argued that an unincorporated business trust is an association and, therefore, a proper entity to hold title to a motor vehicle. There is some support for this argument. See generally 1980 Op. Att'y Gen. 80-144 (stating that, for intangible tax purposes, an unincorporated business trust is an association); 1978 Op. Att'y Gen. 78-42 (opining that a business trust does not have to register as a foreign corporation).
However, many of the definitions of "person" contained in the Georgia Code separately include the terms "association," "trust" and "business trust," thus indicating that the General Assembly did not intend for the terms to be used interchangeably. See O.C.G.A. §§ 2-6-3(2), 3-1-2(17), 10-1-761(3).
More significant, however, is the fact that Title 40, which relates to Motor Vehicles and Traffic, contains two definitions of "person." Official Code of Georgia Annotated § 40-1-1, quoted above, applies generally to the motor vehicle registration and titling. However, O.C.G.A. § 40-2-39, which specifically applies to the registration and licensing of new motor vehicle dealers, defines person as “every natural person, partnership, corporation, association, trust, estate, or any other legal entity.” O.C.G.A. § 40-2-39(7) (emphasis added).
"[I]t is well settled in this jurisdiction that all statutes are presumed to be enacted by the legislature with full knowledge of the existing condition of the law and with reference to it; that they are to be construed in connection and in harmony with the existing law; and that their meaning and effect will be determined in connection, not only with the common law and the Constitution, but also with reference to other statutes and the decisions of the courts." City of Dalton v. Gene Rogers Constr. Co., 223 Ga. App. 819, 821-22 (1996); Buice v. Dixon, 223 Ga. 645 (1967).
Thus, the existence of numerous other definitions in the Georgia Code recognizing "trust" and "business trust," one of which is included in Title 40 of the Georgia Code, indicates that the General Assembly did not intend for motor vehicles to be titled in the name of a business trust. However, there is nothing in Title 40 which would prohibit the trustee of a business trust, in his individual capacity, from holding title to a motor vehicle so long as the trustee is a "natural person, firm, copartnership, association, or corporation."
In order for vehicle titles in Georgia to be held in the name of a trust or a business trust, the General Assembly would have to amend the definition of “person” contained in O.C.G.A. § 40-1-1(43). Thus, it is my official opinion that Georgia law does not permit a certificate of title for a motor vehicle to be held in the name of a business trust.
DENISE E. WHITING-PACK
Assistant Attorney General
The definition of "Owner" contained in O.C.G.A. § 33-34-2, which applies to Motor Vehicle Accident Reparations (no-fault insurance), reads as follows:
"Owner" means the natural person, corporation, firm, partnership, cooperative, association, group, trust, estate, organization, or other entity in whose name the motor vehicle has been registered. If no registration is in effect at the time of an accident involving the motor vehicle, the term means the natural person, corporation, firm, partnership, cooperative, association, group, trust, estate, organization, or other entity who holds the legal title to the motor vehicle or, in the event the motor vehicle is subject to a security agreement or lease with an option to purchase with the debtor or the lessee having the right to possession, the term means the debtor or the lessee.
(Emphasis added.) It appears that this definition conflicts with the definition of “person” contained in Title 40.
Mr. T. Jerry Jackson Page 2