## Facts

- Debtors refinanced obligations with Simmons First Bank of Searcy secured by a mobile home situated on the debtors’ land and by an all-terrain vehicle (ATV).
- The prior lender’s lien on the mobile home, which had been shown on the certificate of title, was released.
- The state issued a new “clean” certificate of title for the mobile home showing no lien.
- Simmons recorded a real-property mortgage encumbering the land and purporting to cover existing and future fixtures.
- Simmons did not have its lien noted on the mobile home’s certificate of title.
- After the debtors filed Chapter 7, the trustee sued to avoid Simmons’s liens as unperfected under 11 U.S.C. § 544(a).
- The bankruptcy court ruled for the trustee, holding Simmons’s liens on the mobile home and ATV were unperfected and avoidable.
- Simmons appealed to the Bankruptcy Appellate Panel for the Eighth Circuit.

## Issues

1. Whether, under Arkansas law, a recorded real-property mortgage with fixture language can perfect a security interest in a mobile home subject to a certificate-of-title perfection statute when the lien is not noted on the certificate of title.
2. Whether Simmons held a perfected security interest in the ATV under Arkansas perfection requirements, or whether the trustee could avoid the lien under 11 U.S.C. § 544(a).

## Decision

- The Bankruptcy Appellate Panel affirmed.
- The court held Simmons’s security interest in the mobile home was unperfected because Arkansas law required lien notation on the certificate of title, and Simmons failed to obtain such notation.
- The court rejected the argument that a recorded real-estate mortgage (including fixture language) was an adequate substitute for compliance with the titling statute.
- The court held Simmons’s security interest in the ATV was also unperfected under applicable Arkansas perfection rules.
- Because the liens were unperfected as of the petition date, the trustee could avoid them under 11 U.S.C. § 544(a).

## Legal Principles

- When state law provides a certificate-of-title method of perfecting security interests in specified collateral, perfection generally requires compliance with the title-notation statute.
- A real-property mortgage or fixture-based recording does not perfect a security interest in titled collateral when the governing titling statute requires lien notation on the certificate of title.
- Under 11 U.S.C. § 544(a), a Chapter 7 trustee may avoid a security interest that is unperfected against a hypothetical judicial lien creditor (and, where applicable, a bona fide purchaser) as of the bankruptcy filing.

## Conclusion

The court held that Arkansas certificate-of-title statutes controlled perfection for the mobile home and ATV, making Simmons’s failure to secure lien notation fatal; the Chapter 7 trustee could therefore avoid both unperfected liens under § 544(a).


In re Renaud, 308 B.R. 347 (B.A.P. 8th Cir. 2004)