When making an agricultural loan, questions often arise about how to properly take a security interest in collateral typically associated with such a loan. Commonly, questions arise when taking a security interest in motor vehicles owned by a farmer.
Indiana’s motor vehicle code draws a distinction between “motor vehicles” on the one hand, and “farm tractors,” “farm trucks, farm trailers, or farm semitrailers and tractors,” “farm vehicles loaded with a farm product,” and “farm wagons” on the other. A “motor vehicle” is one which is self-propelled upon a highway, excluding farm tractors and farm implements designed to be primarily operated in a farm field or farm premises, among other things. A “motor vehicle” is subject to a certificate of title issued by the Indiana Bureau of Motor Vehicles.
In order to take a security interest in a motor vehicle, the secured party must include a specific description of the motor vehicle in the security agreement, and the secured party’s lien should be noted on the certificate of title and the certificate of title is then held by the secured party. Where a vehicle is required to be registered (as opposed to titled), the item should be specifically listed on the security agreement and a financing statement should be filed. Included among these vehicles are farm implements, farm tractors, and certain other types of farm machinery.