On January 1, 2013, the Bank of New Bloomfield (BNB) loaned Jacob $15,000 to purchase a new Dodge Dart. Jacob granted BNB a security interest in the Dart, and BNB promptly and correctly filed an application to have its security interest noted on the certificate of title (issued by Missouri).
On March 1, 2013, Jacob decided to pursue a singing career and moved to Las Vegas, Nevada. In order to improve his singing career, Jacob took out a loan from Vegas Bank (VB) to take voice lessons. VB took a security interest in the car, and applied to the state titling agency in Nevada to have a Nevada title issued with VB's lien noted on it. Although it should not have done so, the Nevada titling agency issued a new title certificate for the car which showed VB's security interest, but not BNB's security interest.
On April 14, 2013, Haden, an avid Dodge Dart collector, noticed Jacob’s car and offered to buy it for face value of $20,000. Jacob sold the vehicle immediately to Haden, who paid cash and drove away with the Dart.
As of April 15, 2013, which statement most accurately describes BNB's rights as against Haden?
1) If Haden bought the Dodge Dart without knowing about BNB’s interest, then BNB has lost its security interest in the Dart.
2) If Haden is also in the business of selling cars, then BNB can repossess the Dart as long as it does so within 4 months of March 1, 2013.
3) BNB's security interest was extinguished when Jacob obtained a new title certificate from Nevada.
4) Both 1 and 2.