§46-9-522. Maintenance and destruction of records.
(a) Post-lapse maintenance and retrieval of information. The
filing office shall maintain a record of the information provided
in a filed financing statement for at least one year after the
effectiveness of the financing statement has lapsed under section
9-515 with respect to all secured parties of record. The record
must be retrievable by using the name of the debtor and:
(1) If the record was filed or recorded in the filing office
described in section 9-501(a)(1), by using the file number assigned
to the initial financing statement to which the record relates and
the date and time that the record was filed or recorded; or
(2) If the record was filed in the filing office described in
section 9-501(a)(2), by using the file number assigned to the
initial financing statement to which the record relates.
(b) Destruction of written records. Except to the extent that
a statute governing disposition of public records provides
otherwise, the filing office immediately may destroy any written
record evidencing a financing statement. However, if the filing
office destroys a written record, it shall maintain another record
of the financing statement which complies with subsection (a) of
this section.
§46-9-523. Information from filing office; sale or license of
records.
(a) Acknowledgment of filing written record. If a person that
files a written record requests an acknowledgment of the filing,
the filing office shall send to the person an image of the record
showing the number assigned to the record pursuant to section
9-519(a)(1) and the date and time of the filing of the record.
However, if the person furnishes a copy of the record to the filing
office, the filing office may instead:
(1) Note upon the copy the number assigned to the record
pursuant to section 9-519(a)(1) and the date and time of the filing
of the record; and
(2) Send the copy to the person.
(b) Acknowledgment of filing other record. If a person files
a record other than a written record, the filing office shall
communicate to the person an acknowledgment that provides:
(1) The information in the record;
(2) The number assigned to the record pursuant to section
9-519(a)(1); and
(3) The date and time of the filing of the record.
(c) Communication of requested information. The filing office
shall communicate or otherwise make available in a record the
following information to any person that requests it:
(1) Whether there is on file on a date and time specified by
the filing office, but not a date earlier than three business days
before the filing office receives the request, any financing
statement that:
(A) Designates a particular debtor;
(B) Has not lapsed under section 9-515 with respect to all
secured parties of record; and
(C) If the request so states, has lapsed under section 9-515
and a record of which is maintained by the filing office under
section 9-522(a);
(2) The date and time of filing of each financing statement;
and
(3) The information provided in each financing statement.
(d) Medium for communicating information. In complying with
its duty under subsection (c) of this section, the filing office
may communicate information in any medium. However, if requested,
the filing office shall communicate information by issuing its
written certificate.
(e) Timeliness of filing office performance. The filing
office shall perform the acts required by subsections (a) through
(d), inclusive, of this section at the time and in the manner
prescribed by filing-office rule, but not later than two business
days after the filing office receives the request.
(f) Public availability of records. At least weekly, the
secretary of state shall offer to sell or license to the public on
a nonexclusive basis, in bulk, copies of all records filed in it
under this part, in every medium from time to time available to the
filing office.
§46-9-524. Delay by filing office.
Delay by the filing office beyond a time limit prescribed by
this part is excused if:
(1) The delay is caused by interruption of communication or
computer facilities, war, emergency conditions, failure of
equipment or other circumstances beyond control of the filing
office; and
(2) The filing office exercises reasonable diligence under the
circumstances.
§46-9-525. Fees.
(a) Initial financing statement or other record: general
rule. Except as otherwise provided in subsection (e) of this
section, the fee for filing and indexing a record under this part,
other than an initial financing statement of the kind described in
subsection (b) of this section, is the amount specified in
subsection (c) of this section, if applicable, plus:
(1) Ten dollars if the record is communicated in writing and
consists of one or two pages;
(2) Ten dollars if the record is communicated in writing and
consists of more than two pages; and
(3) Ten dollars if the record is communicated by another
medium authorized by filing-office rule.
(b) Initial financing statement: public-finance and
manufactured housing transactions. Except as otherwise provided in
subsection (e) of this section, the fee for filing and indexing an
initial financing statement of the kind is the amount specified in
subsection (c) of this section, if applicable, plus:
(1) Ten dollars if the financing statement indicates that it
is filed in connection with a public-finance transaction;
(2) Ten dollars if the financing statement indicates that it
is filed in connection with a manufactured-home transaction.
(c) Number of names. The number of names required to be
indexed does not affect the amount of the fee in subsections (a)
and (b) of this section.
(d) Response to information request. The fee for responding
to a request for information from the filing office, including for
issuing a certificate showing whether there is on file any
financing statement naming a particular debtor, is:
(1) Five dollars if the request is communicated in writing;
(2) Five dollars if the request is communicated by another
medium authorized by filing-office rule; and
(3) Fifty cents per page for each active lien.
(e) Record of mortgage. This section does not require a fee
with respect to a record of a mortgage which is effective as a
financing statement filed as a fixture filing or as a financing
statement covering as-extracted collateral or timber to be cut
under section 9-502(c). However, the recording and satisfaction
fees that otherwise would be applicable to the record of the
mortgage apply.
§46-9-526. Filing-office rules.
(a) Adoption of filing-office rules. The secretary of state
shall propose rules for legislative approval consistent with this article and in accordance with the provisions of article three,
chapter twenty-nine-a of this code.
(1) Consistent with this article; and
(2) Promulgated pursuant to the provisions of chapter twenty-
nine-a of this code.
(b) Harmonization of rules. To keep the filing-office rules
and practices of the filing office in harmony with the rules and
practices of filing offices in other jurisdictions that enact
substantially this part, and to keep the technology used by the
filing office compatible with the technology used by filing offices
in other jurisdictions that enact substantially this part, the
secretary of state, so far as is consistent with the purposes,
policies and provisions of this article, in proposing filing-office
rules for legislative approval, shall:
(1) Consult with filing offices in other jurisdictions that
enact substantially this part; and
(2) Consult the most recent version of the model rules
promulgated by the international association of corporate
administrators or any successor organization; and
(3) Take into consideration the rules and practices of, and
the technology used by, filing offices in other jurisdictions that
enact substantially this part.
§46-9-527. Duty to report.
The secretary of state shall report [on or before ________ ]
to the joint committee on government and finance the first day of
July each year on the operation of the filing office. The report
must contain a statement of the extent to which:
(1) The filing-office rules are not in harmony with the rules
of filing offices in other jurisdictions that enact substantially
this part and the reasons for these variations; and
(2) The filing-office rules are not in harmony with the most
recent version of the model rules promulgated by the international
association of corporate administrators, or any successor
organization, and the reasons for these variations.
PART 6.
DEFAULT.
SUBPART 1. DEFAULT AND ENFORCEMENT OF SECURITY INTEREST.
§46-9-601. Rights after default; judicial enforcement; consignor
or buyer of accounts, chattel paper, payment intangibles or
promissory notes.
(a) Rights of secured party after default. After default, a
secured party has the rights provided in this part and, except as
otherwise provided in section 9-602, those provided by agreement of
the parties. A secured party:
(1) May reduce a claim to judgment, foreclose or otherwise
enforce the claim, security interest or agricultural lien by any
available judicial procedure; and
(2) If the collateral is documents, may proceed either as to
the documents or as to the goods they cover.
(b) Rights and duties of secured party in possession or
control. A secured party in possession of collateral or control
of collateral under section 9-104, 9-105, 9-106 or 9-107 has the
rights and duties provided in section 9-207.
(c) Rights cumulative; simultaneous exercise. The rights
under subsections (a) and (b) of this section are cumulative and
may be exercised simultaneously.
(d) Rights of debtor and obligor. Except as otherwise
provided in subsection (g) of this section and section 9-605, after
default, a debtor and an obligor have the rights provided in this
part and by agreement of the parties.
(e) Lien of levy after judgment. If a secured party has
reduced its claim to judgment, the lien of any levy that may be
made upon the collateral by virtue of an execution based upon the
judgment relates back to the earliest of:
(1) The date of perfection of the security interest or
agricultural lien in the collateral;
(2) The date of filing a financing statement covering the
collateral; or
(3) Any date specified in a statute under which the
agricultural lien was created.
(f) Execution sale. A sale pursuant to an execution is a
foreclosure of the security interest or agricultural lien by
judicial procedure within the meaning of this section. A secured
party may purchase at the sale and thereafter hold the collateral
free of any other requirements of this article.
(g) Consignor or buyer of certain rights to payment. Except
as otherwise provided in section 9-607(c), this part imposes no
duties upon a secured party that is a consignor or is a buyer of
accounts, chattel paper, payment intangibles or promissory notes.
§46-9-602. Waiver and variance of rights and duties.
Except as otherwise provided in section 9-624, to the extent
that they give rights to a debtor or obligor and impose duties on
a secured party, the debtor or obligor may not waive or vary the
rules stated in the following listed sections:
(1) Section 9-207(b)(4)(C), which deals with use and operation
of the collateral by the secured party;
(2) Section 9-210, which deals with requests for an accounting
and requests concerning a list of collateral and statement of
account;
(3) Section 9-607(c), which deals with collection and
enforcement of collateral;
(4) Sections 9-608(a) and 9-615(c) to the extent that they
deal with application or payment of noncash proceeds of collection,
enforcement, or disposition;
(5) Sections 9-608(a) and 9-615(d) to the extent that they
require accounting for or payment of surplus proceeds of
collateral;
(6) Section 9-609 to the extent that it imposes upon a secured
party that takes possession of collateral without judicial process
the duty to do so without breach of the peace;
(7) Sections 9-610(b), 9-611, 9-613 and 9-614, which deal with
disposition of collateral;
(8) Section 9-615(f), which deals with calculation of a
deficiency or surplus when a disposition is made to the secured
party, a person related to the secured party, or a secondary
obligor;
(9) Section 9-616, which deals with explanation of the
calculation of a surplus or deficiency;
(10) Sections 9-620, 9-621 and 9-622, which deal with
acceptance of collateral in satisfaction of obligation;
(11) Section 9-623, which deals with redemption of collateral;
(12) Section 9-624, which deals with permissible waivers; and
(13) Sections 9-625 and 9-626, which deal with the secured
party's liability for failure to comply with this article.
146-9-603. Agreement on standards concerning rights and duties.
(a) Agreed standards. The parties may determine by agreement
the standards measuring the fulfillment of the rights of a debtor
or obligor and the duties of a secured party under a rule stated in
section 9-602 if the standards are not manifestly unreasonable.
(b) Agreed standards inapplicable to breach of peace.
Subsection (a) of this section does not apply to the duty under
section 9-609 to refrain from breaching the peace.
§46-9-604. Procedure if security agreement covers real property or
fixtures.
(a) Enforcement: personal and real property. If a security
agreement covers both personal and real property, a secured party
may proceed:
(1) Under this part as to the personal property without
prejudicing any rights with respect to the real property; or
(2) As to both the personal property and the real property in
accordance with the rights with respect to the real property, in
which case the other provisions of this part do not apply.
(b) Enforcement: fixtures. Subject to subsection (c) of this
section, if a security agreement covers goods that are or become
fixtures, a secured party may proceed:
(1) Under this part; or
(2) In accordance with the rights with respect to real
property, in which case the other provisions of this part do not
apply.
(c) Removal of fixtures. Subject to the other provisions of
this part, if a secured party holding a security interest in
fixtures has priority over all owners and encumbrancers of the real
property, the secured party, after default, may remove the
collateral from the real property.
(d) Injury caused by removal. A secured party that removes
collateral shall promptly reimburse any encumbrancer or owner of
the real property, other than the debtor, for the cost of repair of
any physical injury caused by the removal. The secured party need
not reimburse the encumbrancer or owner for any diminution in value
of the real property caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to
reimbursement may refuse permission to remove until the secured
party gives adequate assurance for the performance of the
obligation to reimburse.
§46-9-605. Unknown debtor or secondary obligor.
A secured party does not owe a duty based on its status as
secured party:
(1) To a person that is a debtor or obligor, unless the
secured party knows:
(A) That the person is a debtor or obligor;
(B) The identity of the person; and
(C) How to communicate with the person; or
(2) To a secured party or lienholder that has filed a
financing statement against a person, unless the secured party
knows:
(A) That the person is a debtor; and
(B) The identity of the person.
§46-9-606. Time of default for agricultural lien.
For purposes of this part, a default occurs in connection with
an agricultural lien at the time the secured party becomes entitled
to enforce the lien in accordance with the statute under which it
was created.
§46-9-607. Collection and enforcement by secured party.
(a) Collection and enforcement generally. If so agreed, and
in any event after default, a secured party:
(1) May notify an account debtor or other person obligated on
collateral to make payment or otherwise render performance to or
for the benefit of the secured party;
(2) May take any proceeds to which the secured party is
entitled under section 9-315;
(3) May enforce the obligations of an account debtor or other
person obligated on collateral and exercise the rights of the
debtor with respect to the obligation of the account debtor or
other person obligated on collateral to make payment or otherwise
render performance to the debtor, and with respect to any property
that secures the obligations of the account debtor or other person
obligated on the collateral;
(4) If it holds a security interest in a deposit account
perfected by control under section 9-104(a)(1), may apply the
balance of the deposit account to the obligation secured by the
deposit account; and
(5) If it holds a security interest in a deposit account
perfected by control under section 9-104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the
benefit of the secured party.
(b) Nonjudicial enforcement of mortgage. If necessary to
enable a secured party to exercise under subsection (a)(3) of this
section the right of a debtor to enforce a mortgage nonjudicially,
the secured party may record in the office in which a record of the
mortgage is recorded:
(1) A copy of the security agreement that creates or provides
for a security interest in the obligation secured by the mortgage;
and
(2) The secured party's sworn affidavit in recordable form
stating that:
(A) A default has occurred; and
(B) The secured party is entitled to enforce the mortgage
nonjudicially.
(c) Commercially reasonable collection and enforcement. A
secured party shall proceed in a commercially reasonable manner if
the secured party:
(1) Undertakes to collect from or enforce an obligation of an
account debtor or other person obligated on collateral; and
(2) Is entitled to charge back uncollected collateral or
otherwise to full or limited recourse against the debtor or a
secondary obligor.
(d) Expenses of collection and enforcement. A secured party
may deduct from the collections made pursuant to subsection (c) of
this section reasonable expenses of collection and enforcement,
including reasonable attorney's fees and legal expenses incurred by
the secured party.
(e) Duties to secured party not affected. This section does
not determine whether an account debtor, bank or other person
obligated on collateral owes a duty to a secured party.
§46-9-608. Application of proceeds of collection or enforcement;
liability for deficiency and right to surplus.
(a) Application of proceeds, surplus and deficiency if
obligation secured. If a security interest or agricultural lien
secures payment or performance of an obligation, the following
rules apply:
(1) A secured party shall apply or pay over for application
the cash proceeds of collection or enforcement under section 9-607
in the following order to:
(A) The reasonable expenses of collection and enforcement and,
to the extent provided for by agreement and not prohibited by law,
reasonable attorney's fees and legal expenses incurred by the
secured party;
(B) The satisfaction of obligations secured by the security
interest or agricultural lien under which the collection or
enforcement is made; and
(C) The satisfaction of obligations secured by any subordinate
security interest in or other lien on the collateral subject to the
security interest or agricultural lien under which the collection
or enforcement is made if the secured party receives an
authenticated demand for proceeds before distribution of the
proceeds is completed.
(2) If requested by a secured party, a holder of a subordinate
security interest or other lien shall furnish reasonable proof of
the interest or lien within a reasonable time. Unless the holder
complies, the secured party need not comply with the holder's
demand under paragraph (1)(C) of this subsection.
(3) A secured party need not apply or pay over for application
noncash proceeds of collection and enforcement under section 9-607
unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash
proceeds shall do so in a commercially reasonable manner.
(4) A secured party shall account to and pay a debtor for any
surplus, and the obligor is liable for any deficiency.
(b) No surplus or deficiency in sales of certain rights to
payment. If the underlying transaction is a sale of accounts,
chattel paper, payment intangibles or promissory notes, the debtor
is not entitled to any surplus and the obligor is not liable for
any deficiency.
§46-9-609. Secured party's right to take possession after default.
(a) Possession; rendering equipment unusable; disposition on
debtor's premises. After default, a secured party:
(1) May take possession of the collateral; and
(2) Without removal, may render equipment unusable and dispose
of collateral on a debtor's premises under section 9-610.
(b) Judicial and nonjudicial process. A secured party may
proceed under subsection (a) of this section:
(1) Pursuant to judicial process; or
(2) Without judicial process, if it proceeds without breach of
the peace.
(c) Assembly of collateral. If so agreed, and in any event
after default, a secured party may require the debtor to assemble
the collateral and make it available to the secured party at a
place to be designated by the secured party which is reasonably
convenient to both parties.
§46-9-610. Disposition of collateral after default.
(a) Disposition after default. After default, a secured party
may sell, lease, license or otherwise dispose of any or all of the
collateral in its present condition or following any commercially
reasonable preparation or processing.
(b) Commercially reasonable disposition. Every aspect of a
disposition of collateral, including the method, manner, time,
place and other terms, must be commercially reasonable. If
commercially reasonable, a secured party may dispose of collateral
by public or private proceedings, by one or more contracts, as a
unit or in parcels, and at any time and place and on any terms.
(c) Purchase by secured party. A secured party may purchase
collateral:
(1) At a public disposition; or
(2) At a private disposition only if the collateral is of a
kind that is customarily sold on a recognized market or the subject
of widely distributed standard price quotations.
(d) Warranties on disposition. A contract for sale, lease,
license or other disposition includes the warranties relating to
title, possession, quiet enjoyment, and the like which by operation
of law accompany a voluntary disposition of property of the kind
subject to the contract.
(e) Disclaimer of warranties. A secured party may disclaim or
modify warranties under subsection (d) of this section:
(1) In a manner that would be effective to disclaim or modify
the warranties in a voluntary disposition of property of the kind
subject to the contract of disposition; or
(2) By communicating to the purchaser a record evidencing the
contract for disposition and including an express disclaimer or
modification of the warranties.
(f) Record sufficient to disclaim warranties. A record is
sufficient to disclaim warranties under subsection (e) of this
section if it indicates "There is no warranty relating to title,
possession, quiet enjoyment, or the like in this disposition" or
uses words of similar import.
§46-9-611. Notification before disposition of collateral.
(a) "Notification date." In this section, "notification date"
means the earlier of the date on which:
(1) A secured party sends to the debtor and any secondary
obligor an authenticated notification of disposition; or
(2) The debtor and any secondary obligor waive the right to
notification.
(b) Notification of disposition required. Except as otherwise
provided in subsection (d) of this section, a secured party that
disposes of collateral under section 9-610 shall send to the
persons specified in subsection (c) of this section a reasonable
authenticated notification of disposition.
(c) Persons to be notified. To comply with subsection (b),
the secured party shall send an authenticated notification of
disposition to:
(1) The debtor;
(2) Any secondary obligor; and
(3) If the collateral is other than consumer goods:
(A) Any other person from which the secured party has
received, before the notification date, an authenticated
notification of a claim of an interest in the collateral;
(B) Any other secured party or lienholder that, ten days
before the notification date, held a security interest in or other
lien on the collateral perfected by the filing of a financing
statement that:
(i) Identified the collateral;
(ii) Was indexed under the debtor's name as of that date; and
(iii) Was filed in the office in which to file a financing
statement against the debtor covering the collateral as of that
date; and
(C) Any other secured party that, ten days before the
notification date, held a security interest in the collateral
perfected by compliance with a statute, regulation, or treaty
described in section 9-311(a).
(d) Subsection (b) inapplicable: perishable collateral;
recognized market. Subsection (b) of this section does not apply
if the collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market.
(e) Compliance with subsection (c)(3)(B). A secured party
complies with the requirement for notification prescribed by
subsection (c)(3)(B) of this section if:
(1) Not later than twenty days or earlier than thirty days
before the notification date, the secured party requests, in a
commercially reasonable manner, information concerning financing
statements indexed under the debtor's name in the office indicated
in subsection (c)(3)(B) of this section; and
(2) Before the notification date, the secured party:
(A) Did not receive a response to the request for information;
or
(B) Received a response to the request for information and
sent an authenticated notification of disposition to each secured
party or other lienholder named in that response whose financing
statement covered the collateral.
§46-9-612. Timeliness of notification before disposition of
collateral.
(a) Reasonable time is question of fact. Except as otherwise
provided in subsection (b) of this section, whether a notification
is sent within a reasonable time is a question of fact.
(b) Ten-day period sufficient in non-consumer transaction. In
a transaction other than a consumer transaction, a notification of
disposition sent after default and ten days or more before the
earliest time of disposition set forth in the notification is sent
within a reasonable time before the disposition.
§46-9-613. Contents and form of notification before disposition of
collateral: general.
Except in a consumer-goods transaction, the following rules
apply:
(1) The contents of a notification of disposition are
sufficient if the notification:
(A) Describes the debtor and the secured party;
(B) Describes the collateral that is the subject of the
intended disposition;
(C) States the method of intended disposition;
(D) States that the debtor is entitled to an accounting of the
unpaid indebtedness and states the charge, if any, for an
accounting; and
(E) States the time and place of a public disposition or the
time after which any other disposition is to be made.
(2) Whether the contents of a notification that lacks any of
the information specified in paragraph (1) of this section are
nevertheless sufficient is a question of fact.
(3) The contents of a notification providing substantially the
information specified in paragraph (1) of this section are
sufficient, even if the notification includes:
(A) Information not specified by that paragraph; or
(B) Minor errors that are not seriously misleading.
(4) A particular phrasing of the notification is not required.
(5) The following form of notification and the form appearing
in section 9-614(3), when completed, each provides sufficient
information:
NOTIFICATION OF DISPOSITION OF COLLATERAL
To: [
Name of debtor, obligor, or other person
to which the notification is sent]
From: [Name, address, and telephone number of
secured party]
Name of Debtor(s): [Include only if debtor(s) are not an
addressee]
For a public disposition:
We will sell or [lease or license, as applicable] the
[describe collateral] to the highest qualified bidder in public
as follows:
Day and Date: ____________
Time:____________
Place:____________
For a private disposition:
We will sell [or lease or license, as applicable] the
[describe collateral] privately sometime after [day and
date] .
You are entitled to an accounting of the unpaid indebtedness
secured by the property that we intend to sell [or lease or
license, as applicable] for a charge of $ __________. You may
request an accounting by calling us at [telephone number] .
[End of Form]
§46-9-614. Contents and form of notification before disposition of
collateral: consumer-goods transaction.
In a consumer-goods transaction, the following rules apply:
(1) A notification of disposition must provide the following
information:
(A) The information specified in section 9-613(1);
(B) A description of any liability for a deficiency of the
person to which the notification is sent;
(C) A telephone number from which the amount that must be paid
to the secured party to redeem the collateral under section 9-623
is available; and
(D) A telephone number or mailing address from which
additional information concerning the disposition and the
obligation secured is available.
(2) A particular phrasing of the notification is not required.
(3) The following form of notification, when completed,
provides sufficient information:
[Name and address of secured party]
[Date]
NOTICE OF OUR PLAN TO SELL PROPERTY
[Name and address of any obligor who is also a debtor]
Subject: [Identification of Transaction]
We have your [describe collateral] , because you broke
promises in our agreement.
For a public disposition:
We will sell [describe collateral] at public sale. A
sale could include a lease or license. The sale will be held as
follows:
Date:______________________________
Time:______________________________
Place:______________________________
You may attend the sale and bring bidders if you want.
For a private disposition:
We will sell [describe collateral] at private sale
sometime after [date] . A sale could include a lease or
license.
The money that we get from the sale (after paying our costs) will
reduce the amount you owe. If we get less money than you owe, you
[will or will not, as applicable] still owe us the
difference. If we get more money than you owe, you will get the
extra money, unless we must pay it to someone else.
You can get the property back at any time before we sell it by
paying us the full amount you owe (not just the past due payments),
including our expenses. To learn the exact amount you must pay,
call us at [telephone number] .
If you want us to explain to you in writing how we have figured the
amount that you owe us, you may call us at [telephone number] or write us at [secured party's address] and
request a written explanation.
If you need more information about the sale call us at
[telephone number] or write us at [secured party's
address] .
We are sending this notice to the following other people who have
an interest in [describe collateral] or who owe money
under your agreement:
[Names of all other debtors and obligors, if any]
[End of Form]
(4) A notification in the form of paragraph (3) of this
section is sufficient, even if additional information appears at
the end of the form.
(5) A notification in the form of paragraph (3) of this
section is sufficient, even if it includes errors in information
not required by paragraph (1) of this section, unless the error is
misleading with respect to rights arising under this article.
(6) If a notification under this section is not in the form of
paragraph (3) of this section, law other than this article determines the effect of including information not required by
paragraph (1) of this section.
§46-9-615. Application of proceeds of disposition; liability for
deficiency and right to surplus.
(a) Application of proceeds. A secured party shall apply or
pay over for application the cash proceeds of disposition under
section 9-610 in the following order to:
(1) The reasonable expenses of retaking, holding, preparing
for disposition, processing and disposing, and, to the extent
provided for by agreement and not prohibited by law, reasonable
attorney's fees and legal expenses incurred by the secured party;
(2) The satisfaction of obligations secured by the security
interest or agricultural lien under which the disposition is made;
(3) The satisfaction of obligations secured by any subordinate
security interest in or other subordinate lien on the collateral
if:
(A) The secured party receives from the holder of the
subordinate security interest or other lien an authenticated demand
for proceeds before distribution of the proceeds is completed; and
(B) In a case in which a consignor has an interest in the
collateral, the subordinate security interest or other lien is
senior to the interest of the consignor; and
(4) A secured party that is a consignor of the collateral if
the secured party receives from the consignor an authenticated
demand for proceeds before distribution of the proceeds is
completed.
(b) Proof of subordinate interest. If requested by a secured
party, a holder of a subordinate security interest or other lien
shall furnish reasonable proof of the interest or lien within a
reasonable time. Unless the holder does so, the secured party need
not comply with the holder's demand under subsection (a)(3).
(c) Application of noncash proceeds. A secured party need not
apply or pay over for application noncash proceeds of disposition
under section 9-610 unless the failure to do so would be
commercially unreasonable. A secured party that applies or pays
over for application noncash proceeds shall do so in a commercially
reasonable manner.
(d) Surplus or deficiency if obligation secured. If the
security interest under which a disposition is made secures payment
or performance of an obligation, after making the payments and
applications required by subsection (a) of this section and
permitted by subsection (c) of this section:
(1) Unless subsection (a)(4) of this section requires the
secured party to apply or pay over cash proceeds to a consignor,
the secured party shall account to and pay a debtor for any
surplus; and
(2) The obligor is liable for any deficiency.
(e) No surplus or deficiency in sales of certain rights to
payment. If the underlying transaction is a sale of accounts,
chattel paper, payment intangibles or promissory notes:
(1) The debtor is not entitled to any surplus; and
(2) The obligor is not liable for any deficiency.
(f) Calculation of surplus or deficiency in disposition to
person related to secured party. The surplus or deficiency
following a disposition is calculated based on the amount of
proceeds that would have been realized in a disposition complying
with this part to a transferee other than the secured party, a
person related to the secured party, or a secondary obligor if:
(1) The transferee in the disposition is the secured party, a
person related to the secured party, or a secondary obligor; and
(2) The amount of proceeds of the disposition is significantly
below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the
secured party, or a secondary obligor would have brought.
(g) Cash proceeds received by junior secured party. A secured
party that receives cash proceeds of a disposition in good faith
and without knowledge that the receipt violates the rights of the
holder of a security interest or other lien that is not subordinate
to the security interest or agricultural lien under which the
disposition is made:
(1) Takes the cash proceeds free of the security interest or
other lien;
(2) Is not obligated to apply the proceeds of the disposition
to the satisfaction of obligations secured by the security interest
or other lien; and
(3) Is not obligated to account to or pay the holder of the
security interest or other lien for any surplus.
§46-9-616. Explanation of calculation of surplus or deficiency.
(a) Definitions. In this section:
(1) "Explanation" means a writing that:
(A) States the amount of the surplus or deficiency;
(B) Provides an explanation in accordance with subsection (c)
of this section of how the secured party calculated the surplus or
deficiency;
(C) States, if applicable, that future debits, credits,
charges, including additional credit service charges or interest,
rebates, and expenses may affect the amount of the surplus or
deficiency; and
(D) Provides a telephone number or mailing address from which
additional information concerning the transaction is available.
(2) "Request" means a record:
(A) Authenticated by a debtor or consumer obligor;
(B) Requesting that the recipient provide an explanation; and
(C) Sent after disposition of the collateral under section
9-610.
(b) Explanation of calculation. In a consumer-goods
transaction in which the debtor is entitled to a surplus or a
consumer obligor is liable for a deficiency under section 9-615,
the secured party shall:
(1) Send an explanation to the debtor or consumer obligor, as
applicable, after the disposition and:
(A) Before or when the secured party accounts to the debtor
and pays any surplus or first makes written demand on the consumer
obligor after the disposition for payment of the deficiency; and
(B) Within fourteen days after receipt of a request; or
(2) In the case of a consumer obligor who is liable for a
deficiency, within fourteen days after receipt of a request, send
to the consumer obligor a record waiving the secured party's right
to a deficiency.
(c) Required information. To comply with subsection (a)(1)(B)
of this section, a writing must provide the following information
in the following order:
(1) The aggregate amount of obligations secured by the
security interest under which the disposition was made, and, if the
amount reflects a rebate of unearned interest or credit service
charge, an indication of that fact, calculated as of a specified
date:
(A) If the secured party takes or receives possession of the
collateral after default, not more than thirty-five days before the
secured party takes or receives possession; or
(B) If the secured party takes or receives possession of the
collateral before default or does not take possession of the
collateral, not more than thirty-five days before the disposition;
(2) The amount of proceeds of the disposition;
(3) The aggregate amount of the obligations after deducting
the amount of proceeds;
(4) The amount, in the aggregate or by type, and types of
expenses, including expenses of retaking, holding, preparing for
disposition, processing, and disposing of the collateral, and
attorney's fees secured by the collateral which are known to the
secured party and relate to the current disposition;
(5) The amount, in the aggregate or by type, and types of
credits, including rebates of interest or credit service charges,
to which the obligor is known to be entitled and which are not
reflected in the amount in paragraph (1) of this subsection; and
(6) The amount of the surplus or deficiency.
(d) Substantial compliance. A particular phrasing of the
explanation is not required. An explanation complying
substantially with the requirements of subsection (a) of this
section is sufficient, even if it includes minor errors that are
not seriously misleading.
(e) Charges for responses. A debtor or consumer obligor is
entitled without charge to one response to a request under this
section during any six-month period in which the secured party did
not send to the debtor or consumer obligor an explanation pursuant
to subdivision (1), subsection (b) of this section. The secured party may require payment of a charge not exceeding twenty-five
dollars for each additional response.
§46-9-617. Rights of transferee of collateral.
(a) Effects of disposition. A secured party's disposition of
collateral after default:
(1) Transfers to a transferee for value all of the debtor's
rights in the collateral;
(2) Discharges the security interest under which the
disposition is made; and
(3) Discharges any subordinate security interest or other
subordinate lien.
(b) Rights of good-faith transferee. A transferee that acts
in good faith takes free of the rights and interests described in
subsection (a) of this section, even if the secured party fails to
comply with this article or the requirements of any judicial
proceeding.
(c) Rights of other transferee. If a transferee does not take
free of the rights and interests described in subsection (a) of
this section, the transferee takes the collateral subject to:
(1) The debtor's rights in the collateral;
(2) The security interest or agricultural lien under which the
disposition is made; and
(3) Any other security interest or other lien.
§46-9-618. Rights and duties of certain secondary obligors.
(a) Rights and duties of secondary obligor. A secondary
obligor acquires the rights and becomes obligated to perform the
duties of the secured party after the secondary obligor:
(1) Receives an assignment of a secured obligation from the
secured party;
(2) Receives a transfer of collateral from the secured party
and agrees to accept the rights and assume the duties of the
secured party; or
(3) Is subrogated to the rights of a secured party with
respect to collateral.
(b) Effect of assignment, transfer or subrogation. An
assignment, transfer or subrogation described in subsection (a) of
this section:
(1) Is not a disposition of collateral under section 9-610;
and
(2) Relieves the secured party of further duties under this
article.
§46-9-619. Transfer of record or legal title.
(a) "Transfer statement." In this section, "transfer
statement" means a record authenticated by a secured party stating:
(1) That the debtor has defaulted in connection with an
obligation secured by specified collateral;
(2) That the secured party has exercised its post-default
remedies with respect to the collateral;
(3) That, by reason of the exercise, a transferee has acquired
the rights of the debtor in the collateral; and
(4) The name and mailing address of the secured party, debtor
and transferee.
(b) Effect of transfer statement. A transfer statement
entitles the transferee to the transfer of record of all rights of
the debtor in the collateral specified in the statement in any
official filing, recording, registration or certificate-of-title
system covering the collateral. If a transfer statement is
presented with the applicable fee and request form to the official
or office responsible for maintaining the system, the official or
office shall:
(1) Accept the transfer statement;
(2) Promptly amend its records to reflect the transfer; and
(3) If applicable, issue a new appropriate certificate of
title in the name of the transferee.
(c) Transfer not a disposition; no relief of secured party's
duties. A transfer of the record or legal title to collateral to
a secured party under subsection (b) of this section or otherwise
is not of itself a disposition of collateral under this article and
does not of itself relieve the secured party of its duties under
this article.
§46-9-620. Acceptance of collateral in full or partial
satisfaction of obligation; compulsory disposition of
collateral.
(a) Conditions to acceptance in satisfaction. Except as
otherwise provided in subsection (g) of this section, a secured
party may accept collateral in full or partial satisfaction of the
obligation it secures only if:
(1) The debtor consents to the acceptance under subsection (c)
of this section;
(2) The secured party does not receive, within the time set
forth in subsection (d) of this section, a notification of
objection to the proposal authenticated by:
(A) A person to which the secured party was required to send
a proposal under section 9-621; or
(B) Any other person, other than the debtor, holding an
interest in the collateral subordinate to the security interest
that is the subject of the proposal;
(3) If the collateral is consumer goods, the collateral is not
in the possession of the debtor when the debtor consents to the
acceptance; and
(4) Subsection (e) of this section does not require the
secured party to dispose of the collateral or the debtor waives the
requirement pursuant to section 9-624.
(b) Purported acceptance ineffective. A purported or apparent
acceptance of collateral under this section is ineffective unless:
(1) The secured party consents to the acceptance in an
authenticated record or sends a proposal to the debtor; and
(2) The conditions of subsection (a) of this section are met.
(c) Debtor's consent. For purposes of this section:
(1) A debtor consents to an acceptance of collateral in
partial satisfaction of the obligation it secures only if the
debtor agrees to the terms of the acceptance in a record
authenticated after default; and
(2) A debtor consents to an acceptance of collateral in full
satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after
default or the secured party:
(A) Sends to the debtor after default a proposal that is
unconditional or subject only to a condition that collateral not in
the possession of the secured party be preserved or maintained;
(B) In the proposal, proposes to accept collateral in full
satisfaction of the obligation it secures; and
(C) does not receive a notification of objection authenticated
by the debtor within twenty days after the proposal is sent.
(d) Effectiveness of notification. To be effective under
subsection (a)(2) of this section, a notification of objection must
be received by the secured party:
(1) In the case of a person to which the proposal was sent
pursuant to section 9-621, within twenty days after notification
was sent to that person; and
(2) In other cases:
(A) Within twenty days after the last notification was sent
pursuant to section 9-621; or
(B) If a notification was not sent, before the debtor consents
to the acceptance under subsection (c) of this section.
(e) Mandatory disposition of consumer goods. A secured party
that has taken possession of collateral shall dispose of the
collateral pursuant to section 9-610 within the time specified in
subsection (f) of this section if:
(1) Sixty percent of the cash price has been paid in the case
of a purchase-money security interest in consumer goods; or
(2) Sixty percent of the principal amount of the obligation
secured has been paid in the case of a non-purchase-money security
interest in consumer goods.
(f) Compliance with mandatory disposition requirement. To
comply with subsection (e) of this section, the secured party shall
dispose of the collateral:
(1) Within ninety days after taking possession; or
(2) Within any longer period to which the debtor and all
secondary obligors have agreed in an agreement to that effect
entered into and authenticated after default.
(g) No partial satisfaction in consumer transaction. In a
consumer transaction, a secured party may not accept collateral in
partial satisfaction of the obligation it secures.
§46-9-621. Notification of proposal to accept collateral.
(a) Persons to which proposal to be sent. A secured party
that desires to accept collateral in full or partial satisfaction
of the obligation it secures shall send its proposal to:
(1) Any person from which the secured party has received,
before the debtor consented to the acceptance, an authenticated
notification of a claim of an interest in the collateral;
(2) Any other secured party or lienholder that, ten days
before the debtor consented to the acceptance, held a security
interest in or other lien on the collateral perfected by the filing
of a financing statement that:
(A) Identified the collateral;
(B) Was indexed under the debtor's name as of that date; and
(C) Was filed in the office or offices in which to file a
financing statement against the debtor covering the collateral as
of that date; and
(3) Any other secured party that, ten days before the debtor
consented to the acceptance, held a security interest in the
collateral perfected by compliance with a statute, regulation or
treaty described in section 9-311(a).
(b) Proposal to be sent to secondary obligor in partial
satisfaction. A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its
proposal to any secondary obligor in addition to the persons
described in subsection (a) of this section.
§46-9-622. Effect of acceptance of collateral.
(a) Effect of acceptance. A secured party's acceptance of
collateral in full or partial satisfaction of the obligation it
secures:
(1) Discharges the obligation to the extent consented to by
the debtor;
(2) Transfers to the secured party all of a debtor's rights in
the collateral;
(3) Discharges the security interest or agricultural lien that
is the subject of the debtor's consent and any subordinate security
interest or other subordinate lien; and
(4) Terminates any other subordinate interest.
(b) Discharge of subordinate interest notwithstanding
noncompliance. A subordinate interest is discharged or terminated
under subsection (a) of this section, even if the secured party
fails to comply with this article.
§46-9-623. Right to redeem collateral.
(a) Persons that may redeem. A debtor, any secondary obligor,
or any other secured party or lienholder may redeem collateral.
(b) Requirements for redemption. To redeem collateral, a
person shall tender:
(1) Fulfillment of all obligations secured by the collateral;
and
(2) The reasonable expenses and attorney's fees described in
section 9-615(a)(1).
(c) When redemption may occur. A redemption may occur at any
time before a secured party:
(1) Has collected collateral under section 9-607;
(2) Has disposed of collateral or entered into a contract for
its disposition under section 9-610; or
(3) Has accepted collateral in full or partial satisfaction of
the obligation it secures under section 9-622.
§46-9-624. Waiver.
(a) Waiver of disposition notification. A debtor or
secondary obligor may waive the right to notification of
disposition of collateral under section 9-611 only by an agreement
to that effect entered into and authenticated after default.
(b) Waiver of mandatory disposition. A debtor may waive the
right to require disposition of collateral under section 9-620(e)
only by an agreement to that effect entered into and authenticated
after default.
(c) Waiver of redemption right. Except in a consumer-goods
transaction, a debtor or secondary obligor may waive the right to
redeem collateral under section 9-623 only by an agreement to that
effect entered into and authenticated after default.
SUBPART 2. NONCOMPLIANCE WITH ARTICLE.
§46-9-625. Remedies for secured party's failure to comply with
article.
(a) Judicial orders concerning noncompliance. If it is
established that a secured party is not proceeding in accordance
with this article, a court may order or restrain collection,
enforcement, or disposition of collateral on appropriate terms and
conditions.
(b) Damages for noncompliance. Subject to subsections (c),
(d) and (f) of this section, a person is liable for damages in the
amount of any loss caused by a failure to comply with this article.
Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of,
alternative financing.
(c) Persons entitled to recover damages; statutory damages in
consumer-goods transaction. Except as otherwise provided in
section 9-628:
(1) A person that, at the time of the failure, was a debtor,
was an obligor, or held a security interest in or other lien on the
collateral may recover damages under subsection (b) of this section
for its loss; and
(2) If the collateral is consumer goods, a person that was a
debtor or a secondary obligor at the time a secured party failed to
comply with this part may recover for that failure in any event an
amount not less than the credit service charge plus ten percent of
the principal amount of the obligation or the time-price
differential plus ten percent of the cash price.
(d) Recovery when deficiency eliminated or reduced. A debtor
whose deficiency is eliminated under section 9-626 may recover
damages for the loss of any surplus. However, a debtor or
secondary obligor whose deficiency is eliminated or reduced under
section 9-626 may not otherwise recover under subsection (b) of this section for noncompliance with the provisions of this part
relating to collection, enforcement, disposition or acceptance.
(e) Statutory damages: noncompliance with specified
provisions. In addition to any damages recoverable under
subsection (b) of this section, the debtor, consumer obligor or
person named as a debtor in a filed record, as applicable, may
recover five hundred dollars in each case from a person that:
(1) Fails to comply with section 9-208;
(2) Fails to comply with section 9-209;
(3) Files a record that the person is not entitled to file
under section 9-509(a);
(4) Fails to cause the secured party of record to file or send
a termination statement as required by section 9-513(a) or (c);
(5) Fails to comply with section 9-616(b)(1) and whose failure
is part of a pattern, or consistent with a practice, of
noncompliance; or
(6) Fails to comply with section 9-616(b)(2).
(f) Statutory damages: noncompliance with section 9-210. A
debtor or consumer obligor may recover damages under subsection (b)
of this section and, in addition, five hundred dollars in each case
from a person that, without reasonable cause, fails to comply with a request under section 9-210. A recipient of a request under
section 9-210 which never claimed an interest in the collateral or
obligations that are the subject of a request under that section
has a reasonable excuse for failure to comply with the request
within the meaning of this subsection.
(g) Limitation of security interest: noncompliance with
section 9-210. If a secured party fails to comply with a request
regarding a list of collateral or a statement of account under
section 9-210, the secured party may claim a security interest only
as shown in the list or statement included in the request as
against a person that is reasonably misled by the failure.
§46-9-626. Action in which deficiency or surplus is in issue.
(a) Applicable rules if amount of deficiency or surplus in
issue. In an action arising from a transaction, other than a
consumer transaction, in which the amount of a deficiency or
surplus is in issue, the following rules apply:
(1) A secured party need not prove compliance with the
provisions of this part relating to collection, enforcement,
disposition or acceptance unless the debtor or a secondary obligor
places the secured party's compliance in issue.
(2) If the secured party's compliance is placed in issue, the
secured party has the burden of establishing that the collection,
enforcement, disposition or acceptance was conducted in accordance
with this part.
(3) Except as otherwise provided in section 9-628, if a
secured party fails to prove that the collection, enforcement,
disposition, or acceptance was conducted in accordance with the
provisions of this part relating to collection, enforcement,
disposition, or acceptance, the liability of a debtor or a
secondary obligor for a deficiency is limited to an amount by which
the sum of the secured obligation, expenses, and attorney's fees
exceeds the greater of:
(A) The proceeds of the collection, enforcement, disposition
or acceptance; or
(B) The amount of proceeds that would have been realized had
the noncomplying secured party proceeded in accordance with the
provisions of this part relating to collection, enforcement,
disposition or acceptance.
(4) For purposes of paragraph (3)(B) of this subsection, the
amount of proceeds that would have been realized is equal to the
sum of the secured obligation, expenses and attorney's fees unless
the secured party proves that the amount is less than that sum.
(5) If a deficiency or surplus is calculated under section
9-615(f), the debtor or obligor has the burden of establishing that
the amount of proceeds of the disposition is significantly below
the range of prices that a complying disposition to a person other
than the secured party, a person related to the secured party, or
a secondary obligor would have brought.
(b) Non-consumer transactions; no inference. The limitation
of the rules in subsection (a) of this section to transactions
other than consumer transactions is intended to leave to the court
the determination of the proper rules in consumer transactions.
The court may not infer from that limitation the nature of the
proper rule in consumer transactions and may continue to apply
established approaches.
§46-9-627. Determination of whether conduct was commercially
reasonable.
(a) Greater amount obtainable under other circumstances; no
preclusion of commercial reasonableness. The fact that a greater
amount could have been obtained by a collection, enforcement,
disposition or acceptance at a different time or in a different
method from that selected by the secured party is not of itself
sufficient to preclude the secured party from establishing that the collection, enforcement, disposition or acceptance was made in a
commercially reasonable manner.
(b) Dispositions that are commercially reasonable. A
disposition of collateral is made in a commercially reasonable
manner if the disposition is made:
(1) In the usual manner on any recognized market;
(2) At the price current in any recognized market at the time
of the disposition; or
(3) Otherwise in conformity with reasonable commercial
practices among dealers in the type of property that was the
subject of the disposition.
(c) Approval by court or on behalf of creditors. A
collection, enforcement, disposition, or acceptance is commercially
reasonable if it has been approved:
(1) In a judicial proceeding;
(2) By a bona fide creditors' committee;
(3) By a representative of creditors; or
(4) By an assignee for the benefit of creditors.
(d) Approval under subsection (c) not necessary; absence of
approval has no effect. Approval under subsection (c) of this
section need not be obtained and lack of approval does not mean that the collection, enforcement, disposition or acceptance is not
commercially reasonable.
§46-9-628. Nonliability and limitation on liability of secured
party; liability of secondary obligor.
(a) Limitation of liability of secured party for noncompliance
with article. Unless a secured party knows that a person is a
debtor or obligor, knows the identity of the person and knows how
to communicate with the person:
(1) The secured party is not liable to the person, or to a
secured party or lienholder that has filed a financing statement
against the person, for failure to comply with this article; and
(2) The secured party's failure to comply with this article
does not affect the liability of the person for a deficiency.
(b) Limitation of liability based on status as secured party.
A secured party is not liable because of its status as secured
party:
(1) To a person that is a debtor or obligor, unless the
secured party knows:
(A) That the person is a debtor or obligor;
(B) The identity of the person; and
(C) How to communicate with the person; or
(2) To a secured party or lienholder that has filed a
financing statement against a person, unless the secured party
knows:
A) That the person is a debtor; and
(B) The identity of the person.
(c) Limitation of liability if reasonable belief that
transaction not a consumer-goods transaction or consumer
transaction. A secured party is not liable to any person, and a
person's liability for a deficiency is not affected, because of any
act or omission arising out of the secured party's reasonable
belief that a transaction is not a consumer-goods transaction or a
consumer transaction or that goods are not consumer goods, if the
secured party's belief is based on its reasonable reliance on:
(1) A debtor's representation concerning the purpose for which
collateral was to be used, acquired or held; or
(2) An obligor's representation concerning the purpose for
which a secured obligation was incurred.
(d) Limitation of liability for statutory damages. A secured
party is not liable to any person under section 9-625(c)(2) for its
failure to comply with section 9-616.
(e) Limitation of multiple liability for statutory damages.
A secured party is not liable under section 9-625(c)(2) more than
once with respect to any one secured obligation.
PART 7. TRANSITION.
§46-9-701. Effective date.
This article takes effect on the first day of July, two
thousand one.
§46-9-702. Savings clause.
(a) Pre-effective-date transactions or liens. Except as
otherwise provided in this part, this article applies to a
transaction or lien within its scope, even if the transaction or
lien was entered into or created before this article takes effect.
(b) Continuing validity. Except as otherwise provided in
subsection (c) of this section and sections 9-703 through 9-709:
(1) Transactions and liens that were not governed by former
article nine, were validly entered into or created before this
article takes effect and would be subject to this article if they
had been entered into or created after this article takes effect,
and the rights, duties and interests flowing from those
transactions and liens remain valid after this article takes
effect; and
(2) The transactions and liens may be terminated, completed,
consummated and enforced as required or permitted by this article
or by the law that otherwise would apply if this article had not
taken effect.
(c) Pre-effective-date proceedings. This article does not
affect an action, case or proceeding commenced before this article
takes effect.
§46-9-703. Security interest perfected before effective date.
(a) Continuing priority over lien creditor: perfection
requirements satisfied. A security interest that is enforceable
immediately before this article takes effect and would have
priority over the rights of a person that becomes a lien creditor
at that time is a perfected security interest under this article
if, when this article takes effect, the applicable requirements for
enforceability and perfection under this article are satisfied
without further action.
(b) Continuing priority over lien creditor: perfection
requirements not satisfied. Except as otherwise provided in
section 9-705, if, immediately before this article takes effect, a
security interest is enforceable and would have priority over the
rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under
this article are not satisfied when this article takes effect, the
security interest:
(1) Is a perfected security interest for two years after this
article takes effect;
(2) Remains enforceable thereafter only if the security
interest becomes enforceable under section 9-203 before the second
year expires; and
(3) Remains perfected thereafter only if the applicable
requirements for perfection under this article are satisfied before
the second year expires.
§46-9-704. Security interest unperfected before effective date.
A security interest that is enforceable immediately before
this article takes effect but which would be subordinate to the
rights of a person that becomes a lien creditor at that time:
(1) Remains an enforceable security interest for two years
after this article takes effect;
(2) Remains enforceable thereafter if the security interest
becomes enforceable under section 9-203 when this article takes
effect or within two years thereafter; and
(3) Becomes perfected:
(A) Without further action, when this article takes effect if
the applicable requirements for perfection under this article are
satisfied before or at that time; or
(B) When the applicable requirements for perfection are
satisfied if the requirements are satisfied after that time.
§46-9-705. Effectiveness of action taken before effective date.
(a) Pre-effective-date action; two-year perfection period
unless reperfected. If action, other than the filing of a
financing statement, is taken before this article takes effect and
the action would have resulted in priority of a security interest
over the rights of a person that becomes a lien creditor had the
security interest become enforceable before this article takes
effect, the action is effective to perfect a security interest that
attaches under this article within two years after this article
takes effect. An attached security interest becomes unperfected
two years after this article takes effect unless the security
interest becomes a perfected security interest under this article
before the expiration of that period.
(b) Pre-effective-date filing. The filing of a financing
statement before this article takes effect is effective to perfect a security interest to the extent the filing would satisfy the
applicable requirements for perfection under this article.
(c) Pre-effective-date filing in jurisdiction formerly
governing perfection. This article does not render ineffective an
effective financing statement that, before this article takes
effect, is filed and satisfies the applicable requirements for
perfection under the law of the jurisdiction governing perfection
as provided in former section 9-103. However, except as otherwise
provided in subsections (d) and (e) of this section and section 9-
706, the financing statement ceases to be effective at the earlier
of:
(1) The time the financing statement would have ceased to be
effective under the law of the jurisdiction in which it is filed;
or
(2) The thirtieth day of June, two thousand six.
(d) Continuation statement. The filing of a continuation
statement after this article takes effect does not continue the
effectiveness of the financing statement filed before this article
takes effect. However, upon the timely filing of a continuation
statement after this article takes effect and in accordance with
the law of the jurisdiction governing perfection as provided in part 3, the effectiveness of a financing statement filed in the
same office in that jurisdiction before this article takes effect
continues for the period provided by the law of that jurisdiction.
(e) Application of subsection (c)(2) to transmitting utility
financing statement. Subsection (c)(2) of this section applies to
a financing statement that, before this article takes effect, is
filed against a transmitting utility and satisfies the applicable
requirements for perfection under the law of the jurisdiction
governing perfection as provided in former section 9-103 only to
the extent that part 3 provides that the law of a jurisdiction
other than jurisdiction in which the financing statement is filed
governs perfection of a security interest in collateral covered by
the financing statement.
(f) Application of part 5. A financing statement that
includes a financing statement filed before this article takes
effect and a continuation statement filed after this article takes
effect is effective only to the extent that it satisfies the
requirements of part 5 for an initial financing statement.
§46-9-706. When initial financing statement suffices to continue
effectiveness of financing statement.
(a) Initial financing statement in lieu of continuation
statement. The filing of an initial financing statement in the
office specified in section 9-501 continues the effectiveness of a
financing statement filed before this article takes effect if:
(1) The filing of an initial financing statement in that
office would be effective to perfect a security interest under this
article;
(2) The pre-effective-date financing statement was filed in an
office in another state or another office in this state; and
(3) The initial financing statement satisfies subsection (c)
of this section.
(b) Period of continued effectiveness. The filing of an
initial financing statement under subsection (a) of this section
continues the effectiveness of the pre-effective-date financing
statement:
(1) If the initial financing statement is filed before this
article takes effect, for the period provided in former section 9-
403 with respect to a financing statement; and
(2) If the initial financing statement is filed after this
article takes effect, for the period provided in section 9-515 with
respect to an initial financing statement.
(c) Requirements for initial financing statement under
subsection (a). To be effective for purposes of subsection (a) of
this section, an initial financing statement must:
(1) Satisfy the requirements of part 5 for an initial
financing statement;
(2) Identify the pre-effective-date financing statement by
indicating the office in which the financing statement was filed
and providing the dates of filing and file numbers, if any, of the
financing statement and of the most recent continuation statement
filed with respect to the financing statement; and
(3) Indicate that the pre-effective-date financing statement
remains effective.
§46-9-707. Amendment of pre-effective-date financing statement.
(a) "Pre-effective-date financing statement". In this
section, "pre-effective-date financing statement" means a financing
statement filed before this article takes effect.
(b) Applicable law. After this article takes effect, a person
may add or delete collateral covered by, continue or terminate the
effectiveness of, or otherwise amend the information provided in,
a pre-effective-date financing statement only in accordance with
the law of the jurisdiction governing perfection as provided in part 3. However, the effectiveness of a pre-effective-date
financing statement also may be terminated in accordance with the
law of the jurisdiction in which the financing statement is filed.
(c) Method of amending: general rule. Except as otherwise
provided in subsection (d) of this section, if the law of this
state governs perfection of a security interest, the information in
a pre-effective-date financing statement may be amended after this
article takes effect only if:
(1) The pre-effective-date financing statement and an
amendment are filed in the office specified in section 9-501'
(2) An amendment is filed in the office specified in section
9-501 concurrently with, or after the filing in that office of, an
initial financing statement that satisfies section 9-706(c); or
(3) An initial financing statement that provides the
information as amended and satisfies section 9-706(c) is filed in
the office specified in section 9-501.
(d) Method of amending: continuation. If the law of this
state governs perfection of a security interest, the effectiveness
of a pre-effective-date financing statement may be continued only
under section 9-705(d) and (f) or 9-706.
(e) Method of amending: additional termination rule. Whether
or not the law of this state governs perfection of a security
interest, effectiveness of a pre-effective-date financing statement
filed in this state may be terminated after this article takes
effect by filing a termination statement in the office in which the
pre-effective-date financing statement is filed, unless an initial
financing statement that satisfies section 9-706(c) has been filed
in the office specified by the law of the jurisdiction governing
perfection as provided in part 3 as the office in which to file a
financing statement.
§46-9-708. Persons entitled to file initial financing statement or
continuation statement.
A person may file an initial financing statement or a
continuation statement under this part if:
(1) The secured party of record authorizes the filing; and
(2) The filing is necessary under this part:
(A) To continue the effectiveness of a financing statement
filed before this article takes effect; or
(B) To perfect or continue the perfection of a security
interest.
§46-9-709. Priority.
(a) Law governing priority. This article determines the
priority of conflicting claims to collateral. However, if the
relative priorities of the claims were established before this
article takes effect, former article nine determines priority.
(b) Priority if security interest becomes enforceable under
section 9-203. For purposes of section 9-322(a), the priority of
a security interest that becomes enforceable under section 9-203 of
this article dates from the time this article takes effect if the
security interest is perfected under this article by the filing of
a financing statement before this article takes effect which would
not have been effective to perfect the security interest under
former article nine. This subsection does not apply to conflicting
security interests each of which is perfected by the filing of such
a financing statement.
CHAPTER 46A. WEST VIRGINIA CONSUMER CREDIT AND PROTECTION ACT.
ARTICLE 2. CONSUMER CREDIT PROTECTION.
§46A-2-119a. Secured transaction; use of price guide value in
calculating deficiency or surplus.
(a) This section applies to the following transactions:
(1) Transactions in which a purchase money security interest
is taken in collateral which is being purchased primarily for a
personal, family, household or agricultural purpose;
(2) Transactions in which a security interest is taken in
collateral which was used primarily for a personal, family,
household or agricultural purpose prior to the giving the security
interest; or
(3) Transactions in which a security interest is taken in
collateral for a debt that was incurred primarily for a personal,
family, household or agricultural purpose.
(b) This section takes effect on the first day of July, two
thousand two, and is applicable notwithstanding the provisions of:
(1) Section six hundred ten, article nine, chapter forty-six
of this code, providing that disposition may only be by certain
public or private sale, lease or license procedures;
(2) Section six hundred ten, article nine, chapter forty-six
of this code, requiring that those procedures be commercially
reasonable;
(3) Section six hundred fifteen, article nine, chapter forty-
six of this code, providing for the application of the proceeds;
(4) Section six hundred twenty, article nine, chapter forty-
six of this code, requiring disposition by sale, lease or license
in certain circumstances; and
(5) Section six hundred two, article nine, chapter forty-six
of this code, providing that these sections may not be waived or
varied by agreement.
(c) For purposes of this section, the term "debtor" shall be
deemed to refer collectively to each person who is indebted to a
secured creditor in connection with a consumer lease or consumer
loan, whether the person's obligation arises as a co-maker,
endorser or guarantor of the lease or loan.
(d) After a default by the debtor and after the secured
creditor takes or receives possession of collateral or makes
collateral unusable as provided in section six hundred nine,
article nine, chapter forty-six of this code, the secured creditor
may send a written proposal to the debtor setting forth a value for
the secured creditor's collateral which value, less any expenses of
taking and holding the collateral, shall be credited against the
debtor's obligation to the secured creditor. The written proposal
must explain that:
(1) The proposal becomes effective only if the debtor agrees
to it in writing but the debtor is not required to agree to the
written proposal;
(2) If the debtor does not agree to the proposal in writing,
then the goods which are the subject of the written proposal will be disposed of in a "commercially reasonable" manner by the secured
creditor in accordance with applicable law, and the amount received
from the disposition of the collateral, less the expenses of taking
and holding the collateral, preparing the collateral of the sale or
lease, and selling the collateral, will be the amount credited
against the debtor's obligation to the secured creditor when
calculating the deficiency owed by the debtor to the secured
creditor or the surplus owed by the secured creditor to the debtor;
(3) If the debtor agrees to the written proposal, then the
debtor will thereby release and waive any claims against the
secured creditor that the disposition of the collateral was not
commercially reasonable or was otherwise improper; and
(4) The written proposal may set forth a date and time by
which the debtor's written agreement must be received by secured
creditor in order for the agreement to become effective.
(5) The following form, when reproduced on a single sheet of
paper with no other statements or agreements and accurately
completed, meets the requirements of this section even if it
contains typographical or other minor errors that are not
misleading:
[Name and address of secured party]
[Date]
TO: [Name and address of debtor]
OFFER TO CREDIT PRICE GUIDE VALUE
We have possession of your [describe collateral]
("property") (or we have made it unusable by you), because you
broke the terms of our agreement.
By law, we may sell, lease or license this property in any
commercially reasonable manner. If we choose to sell the property
at a public sale we will give you notice of the date, time and
place of the sale and you may attend the sale and bring bidders if
you want. If we choose to sell the property at a private sale we
will give you notice of the date after which the sale will take
place. From the money we are paid from the sale of the property,
we may subtract our expenses in getting the property from you,
storing it, preparing and selling, leasing or licensing it. The
sale money left over after these expenses are subtracted will then
be subtracted from what you owe us. If we receive less money than
you owe, you will still owe us the difference. If we receive more
money than you owe, you will get the extra money back (unless we
are required to pay it to someone else).
Instead of selling, leasing or licensing this property, we are
now offering to subtract the amount of $ [enter amount] from
what you owe us. We have calculated this amount by adding the
retail value of the property of $ [insert retail value] and the
[insert other value pursuant to § 46A-2-119a(5)] value of the
property of $ [enter amount] and dividing that total by 2 ("value
amount"). These values were obtained from _____________, a price
guide in general use as of the date we got possession of or
rendered the property unusable by you. From the value amount we
have subtracted our expenses of $ [enter amount] in taking back
the property from you, and our expenses of $ [enter amount] for
storing the property through the date below by which you must
respond to this offer.
You do not have to accept this offer. To agree to our offer,
you must sign this notice at the bottom no sooner than one day
after the date on which you received this offer and deliver it or
have it delivered to us before [enter date by which the secured
party determines the offer must be accepted] . If you agree to
this offer, you are giving up any right to hold us liable for the
way that we sell, lease or otherwise dispose of the property and
account for the proceeds.
You can get the property back at any time before you accept
this offer or we sell, lease or license the property by paying us
the full amount you owe (not just the past due payments), including
our expenses so far. To learn the exact amount you must pay, you
may call us at [telephone number] . If you want us to explain to
you in writing how we calculated the amount that you owe us, you
may call us at [telephone number] or write us at [secured
party's address] and request a written explanation.
[We are sending this notice to the following other people who
owe money under our agreement. They will also have to agree to our
offer or we will sell the property as we normally do.
[Names of all other debtors and obligors, if any]]
I accept the offer:
Signed ___________________________
Date of signature ___________________
[End of Form]
(e) (1) The value of the collateral set forth in the written
proposal shall be determined from any price guide used generally by
persons who are not purchasers or lessees of that type of
collateral and who insure, lend money for the purchase of, lease or otherwise deal in goods of the same type as the collateral when it
would be to the advantage of the user for the price guide to have
higher values.
(2) The value of the collateral set forth in the written
proposal shall be determined as of the date the secured party took
possession of the collateral, received possession of the collateral
or rendered the collateral unusable.
(3) For a motor vehicle, as that term is defined by section
one, article one, chapter seventeen-a of this code, the value of
the motor vehicle collateral shall be calculated by adding together
the retail value and the trade-in value for the motor vehicle and
dividing that sum by two.
(4) For a manufactured home, mobile home or house trailer, as
those terms are defined in section one, article six, chapter
seventeen-a of this code, which at the time of default was located
on a lot owned by the debtor, an obligor or a person related to the
debtor, the value of the manufactured home, mobile home or house
trailer collateral shall be calculated by adding together the
retail value and the wholesale value designated for the
manufactured home that is moved for resale, mobile home or house
trailer and dividing that sum by two.
(5) For a manufactured home, mobile home or house trailer, as
those terms are defined in section one, article six, chapter
seventeen-a of this code, which at the time of default was located
on a lot owned by a person or organization in the business of
renting or leasing lots or on a lot owned by a person who is not
the debtor, an obligor or a person related to the debtor or
obligor, the value of the manufactured home, mobile home or house
trailer collateral shall be calculated by adding together the
retail value and the wholesale value designated for collateral that
is offered for sale without moving the collateral from its current
location, and dividing that sum by two.
(6) For other personal property, the value of the collateral
shall be calculated by adding together the used retail value and
the highest listed wholesale value for the property and dividing
that sum by two.
(f) If the debtor agrees in writing to the written proposal
within the time period prescribed by the secured creditor, then:
(1) The collateral value as calculated in subsection (e)
above, less any expenses of taking and holding the collateral,
shall be applied to the indebtedness as provided in section six
hundred fifteen, article nine, chapter forty-six of this code;
(2) Any expenses incurred by the secured creditor in the
actual sale or lease of the collateral or preparing the collateral
for sale or lease may not be charged to the debtor but must be born
by the secured creditor; and
(3) The secured creditor is not required to dispose of the
collateral in a commercially reasonable manner and is not liable
for any failure to comply with any law of this state relating to
the disposition of the collateral or application of the proceeds.
(g) The written agreement of the debtor is not valid unless it
is signed by the debtor on or after the next calendar day after it
is received by the debtor or the second calendar day after it was
sent to the debtor.
(h) If the debtor is more than one person, then the secured
creditor must send the proposal described in subsection (d) of this
section to all such persons. If any one of the persons indebted to
a secured creditor on a consumer lease or consumer loan does not
agree in writing to the proposal or does not respond timely to the
proposal, then the secured creditor must proceed with a sale or
other disposition of its collateral as provided in article nine,
chapter forty-six of this code.
(i) If a person other than the debtor has a recorded ownership
interest in property securing the debtor's obligation to a secured creditor and such other person is not also indebted to the secured
creditor on such obligation, then the secured creditor must send a
copy of the proposal described in subsection (d) of this section to
such other person but is not required to obtain such other person's
consent or agreement to the proposal in order to effect the
proposal.
(j) Upon receipt of the debtor's executed acceptance of a
written proposal described in subsection (d) of this section, title
to the collateral described in the proposal shall be deemed to pass
to the secured creditor unless such collateral is a vehicle,
manufactured home, mobile home or house trailer.
(k) Upon presentation of the debtor's executed acceptance of
a written proposal described in subsection (d) of this section to
the department of motor vehicles and a certificate of title to the
debtor's vehicle, manufactured home, mobile home or house trailer
described in the written proposal, the department of motor vehicles
shall issue a new certificate of title to the vehicle, manufactured
home, mobile home or house trailer in the name of the secured
creditor as the owner thereof.
(l) Nothing in this section may be construed to create,
directly or indirectly, or impose a duty on the secured creditor to
make a written offer or give notice under this section. A secured creditor's failure to make a written proposal shall not subject the
secured creditor to any liability to the debtor or any other
person.
(m) The provisions of this section may not be waived or
varied.