(1) The Department of Motor Vehicles shall issue a bonded certificate of title to an applicant who:
(a) Presents evidence reasonably sufficient to satisfy the department of the applicant's ownership of the motorboat or security interest in the motorboat;
(b) Pays a fee of fifty dollars for motorboats manufactured on or after January 1, 1990, and twenty dollars for motorboats manufactured prior to January 1, 1990; and
(c) Files a bond in a form prescribed by the department and executed by the applicant.
(2) The bond shall be issued by a surety company authorized to transact business in this state, in an amount equal to one and one-half times the value of the motorboat as determined by the department using reasonable appraisal methods, and conditioned to indemnify any prior owner and secured party, any subsequent purchaser and secured party, and any successor of the purchaser and secured party for any expense, loss, or damage, including reasonable attorney's fees, incurred by reason of the issuance of the certificate of title to the motorboat or any defect in or undisclosed security interest upon the right, title, and interest of the applicant in and to the motorboat. An interested person may have a cause of action to recover on the bond for a breach of the conditions of the bond. The aggregate liability of the surety to all persons having a claim shall not exceed the amount of the bond.
(3) At the end of three years after the issuance of the bond, the holder of the certificate of title may apply to the department on a form prescribed by the department for the release of the bond and the removal of the notice required by subsection (4) of this section if no claim has been made on the bond. The department may release the bond at the end of three years after the issuance of the bond if all questions as to the ownership of the motorboat have been answered to the satisfaction of the department unless the department has been notified of the pendency of an action to recover on the bond. If the currently valid certificate of title is surrendered to the department, the department may release the bond prior to the end of the three-year period.
(4) The department shall include the following statement on a bonded certificate of title issued pursuant to this section and any subsequent title issued as a result of a title transfer while the bond is in effect:
NOTICE: THIS MOTORBOAT MAY BE SUBJECT TO AN UNDISCLOSED INTEREST, BOND NUMBER ............ .
(5) The department shall recall a bonded certificate of title if the department finds that the application for the title contained a false statement or if a check presented by the applicant for fees pursuant to this section is returned uncollected by a financial institution.
(6) The department shall remit fees collected pursuant to this section to the State Treasurer for credit to the Department of Motor Vehicles Cash Fund.