APPLICATION FOR TERMINATION OF SECURITY INTEREST WITHOUT CERTIFICATE OF TITLE.

(a) Except as provided by Sections 31.0575 and 31.0577, if the department receives, unaccompanied by a signed certificate of title, an application for a new certificate of title that includes an indication of a termination statement, the department may issue a new certificate of title under this section only if:

(1) all other requirements under Sections 31.047 and 31.0485 are met;

(2) the applicant provides an affidavit stating facts showing the applicant is entitled to a termination statement;

(3) the applicant provides the department with satisfactory evidence that notification of the application has been sent to all persons indicated in the files of the department as having a security interest in the vessel or outboard motor, not earlier than the 45th day after the date the notification was sent, and the department has not received an objection from any of those persons; and

(4) the applicant submits any other information required by the department as evidence of the applicant's right to terminate the security interest, and the department has no credible information indicating theft, fraud, or an undisclosed or unsatisfied security interest, lien, or other claim to an interest in the vessel or outboard motor.

(b) The department may indicate in a certificate of title issued under Subsection (a) that the certificate of title was issued without submission of a termination statement. Unless credible information indicating theft, fraud, or an undisclosed or unsatisfied security interest, lien, or other claim to an interest in the vessel or outboard motor is delivered to the department not later than the first anniversary of the date of the issuance of the certificate of title under Subsection (a), on request in a form and manner required by the department, the department shall remove the indication from the certificate of title.

(c) Unless the department determines that the value of a vessel or outboard motor is less than $5,000, the department may require the applicant to post a bond or provide an equivalent source of indemnity or security before the department issues a certificate of title under Subsection (a). The bond, indemnity, or other security may not exceed twice the value of the vessel or outboard motor as determined by the department. The bond, indemnity, or other security must be in a form required by the department and provide for indemnification of any owner, purchaser, or other claimant for any expense, loss, delay, or damage, including reasonable attorney's fees and costs, but not including incidental or consequential damages, resulting from issuance or amendment of the certificate of title.

(d) Unless the department receives a claim for indemnity not later than the first anniversary of the date of the issuance of a certificate of title under Subsection (a), on request in a form and manner required by the department, the department shall release any bond, indemnity, or other security.