(a) Unless Subsection (b) applies, at or before the time the owner of record transfers an ownership interest in a hull-damaged vessel that is covered by a certificate of title issued by the department, if the damage occurred while that person was an owner of the vessel and the person has notice of the damage at the time of the transfer, the owner shall:
(1) deliver to the department an application for a new certificate of title that complies with Section 31.046 and includes the title brand "Hull Damaged"; or
(2) indicate on the certificate of title in the place designated for that purpose that the vessel is hull damaged and deliver the certificate to the transferee.
(b) Before an insurer transfers an ownership interest in a hull-damaged vessel that is covered by a certificate of title issued by the department, the insurer shall deliver to the department an application for a new certificate of title that complies with Section 31.046 and includes the title brand "Hull Damaged".
(c) Not later than the 20th day after the date of delivery to the department of an application under Subsection (a)(1) or (b) or a certificate of title under Subsection (a)(2), the department shall issue a new certificate of title that indicates that the vessel is title branded "Hull Damaged".
(d) A person commits an offense if the person:
(1) intentionally or knowingly:
(A) fails to comply with Subsection (a) or (b); or
(B) solicits or colludes in a failure by an owner of record to comply with Subsection (a); or
(2) negligently fails to comply with Subsection (a) or (b).
(e) An offense under Subsection (d)(1) is a Class B Parks and Wildlife Code misdemeanor. An offense under Subsection (d)(2) is a Class C Parks and Wildlife Code misdemeanor.