## Facts

- A decedent purchased a motor vehicle using financing from a bank that claimed a security interest in the vehicle.
- Under North Carolina law, perfection of a security interest in a titled motor vehicle generally requires compliance with the certificate-of-title process, including proper submission of title documents and lien notation on the title.
- Irregularities occurred in the documentation and/or steps used to reflect and perfect the bank’s claimed lien (including defects relating to the title application process and/or lien notation).
- After the decedent’s death, the personal representative took possession of the vehicle as an estate asset.
- The bank asserted it held a secured claim in the vehicle; the estate contended the bank’s interest was not properly created and/or perfected and thus could not be enforced against the estate.

## Issues

1. Whether the bank obtained an enforceable security interest in the vehicle under North Carolina’s U.C.C. Article 9 as applied through the motor vehicle title statutes, given defects in the paperwork and process.
2. Whether the bank’s claimed security interest, if it attached, was perfected in the manner required to be effective and have priority against the decedent’s estate.
3. Whether “substantial compliance” or equitable considerations can cure noncompliance with the statutory method of perfecting a lien on a titled motor vehicle.

## Decision

- The Court of Appeals affirmed the trial court’s judgment for the estate.
- The court held the bank failed to comply with the statutory method required to perfect a security interest in a titled motor vehicle.
- Because the statutory steps were not properly satisfied, the bank’s claimed lien was unperfected and ineffective against the estate.
- The court rejected arguments that substantial compliance or equity should preserve the bank’s asserted secured status.

## Legal Principles

- When a certificate-of-title statute prescribes the method for perfecting a security interest in a motor vehicle, that method controls for perfection and notice to third parties.
- A creditor that does not follow the prescribed title-statute process (including proper lien notation) remains unperfected, and an unperfected interest is not enforceable with priority against an estate.
- Courts will not use equitable doctrines or substantial-compliance reasoning to excuse clear failures to meet mandatory perfection requirements for titled vehicles.

## Conclusion

The court ruled that a secured creditor must strictly comply with North Carolina’s certificate-of-title perfection requirements to enforce a vehicle lien against a decedent’s estate; defects in the required titling and lien-notation process left the bank unperfected and unable to claim the vehicle as collateral against the estate.


In re Estate of Washburn, 581 S.E.2d 148 (N.C. Ct. App. 2003)