TERMINATION STATEMENT.

(a) A secured party indicated in the files of the department as having a security interest in a vessel or outboard motor shall deliver a termination statement to the department and, on the debtor's request, to the debtor, not later than the earlier of:

(1) the 20th day after the date the secured party receives a signed demand from an owner for a termination statement and there is no obligation secured by the vessel or outboard motor subject to the security interest and no commitment to make an advance, incur an obligation, or otherwise give value secured by the vessel or outboard motor; or

(2) if the vessel or outboard motor is used or bought for use primarily for personal, family, or household purposes, the 30th day after the date that no obligation is secured by the vessel or outboard motor and no commitment exists to make an advance, incur an obligation, or otherwise give value secured by the vessel or outboard motor.

(b) If a written certificate of title has been issued and delivered to a secured party and a termination statement is required under Subsection (a), the secured party, not later than the date required by Subsection (a), shall deliver the certificate of title to the debtor or to the department with the statement. If the certificate of title is lost, stolen, mutilated, destroyed, or is otherwise unavailable or illegible, the secured party shall deliver with the statement, not later than the date required by Subsection (a), an application for a replacement certificate of title meeting the requirements prescribed in the regulations adopted under Section 31.051.

(c) On delivery to the department of a termination statement authorized by the secured party, and, if applicable, an application for a replacement certificate of title meeting the requirements prescribed in the regulations adopted under Section 31.051, the security interest to which the statement relates ceases to be perfected. If the security interest to which the statement relates was indicated on the certificate of title, the department shall issue a new certificate of title and deliver the new certificate of title or a record evidencing an electronic certificate of title. The department shall maintain in its files the date and time of delivery to the department of the termination statement.

(d) A secured party that fails to comply with this section is liable for:

(1) any loss that the secured party had reason to know might result from the secure party's failure to comply and which could not reasonably have been prevented; and

(2) the cost of an application for a certificate of title under Section 31.047 or a replacement certificate of title under the regulations adopted under Section 31.051.