(1) An owner of a watercraft and a person mentioned as owner in the last certificate of title, when the watercraft is dismantled, destroyed, or changed in such manner that it loses its character as a watercraft, or changed in such manner that it is not the watercraft described in the certificate of title, shall surrender the certificate of title to the secretary of state, and the secretary of state shall, with the consent of a holder of a lien noted on the certificate of title, enter a cancellation upon his or her records.

    (2) Upon the cancellation of a certificate of title in the manner prescribed by subsection (1), the secretary of state may cancel and destroy the certificates.