Case Summary:
Two and a half years prior to filing his Chapter 7 petition, the Debtor obtained a loan to purchase a manufactured home. The Debtor applied for a new title certificate from the Wisconsin Department of Commerce (DOC). His application was returned because he did not submit an existing certificate of title to accompany the application. The Debtor took no further action to title the home. When the Bank filed a motion for abandonment in the Debtor’s bankruptcy the Trustee objected, stating that the Bank’s lien was not perfected because there was no title showing the Bank’s interest. The Bank argued that its security interest in the Debtor’s home was perfected when the DOC received the application and accompanying fees, and that sending an existing certificate of title was unnecessary because one did not exist. The Bank’s alternative argument was that the Debtor did not own his home because there was no certificate of title indicating his ownership, and if the Debtor has no interest in the home the trustee has no standing to challenge the bank’s lien. The Court held that the Bank’s security interest was not perfected because the requirements of Wis. Stat. § 101.9213(2) were not met. Not having a certificate of title on hand is not the same as there being no certificate of title in existence. The Bank did not comply with statutory requirements to timely perfect its lien. The Bank’s argument that the Debtor did not own his home and that the Trustee lacked standing to object to the Bank’s motion also fails. Even if the Debtor did not have all the legal indices of ownership of the property due to his failure to comply with Wis. Stat. § 101.9209, he still has an equitable interest in the property based on his payment of the purchase price to the seller. The bankruptcy estate includes equitable interests of a debtor in property as of the commencement of the case. The Bank’s motion for abandonment was denied.

Statute/Rule References:
Wis. Stat. § 101.9203 -- When Certificate of Title Required
Wis. Stat. § 101.9213 -- Perfection of Security Interests
Wis. Stat. § 101.9214 -- Duties on Creation of Security Interest

Key Terms:
Security Interests - Perfection