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The Vermont Statutes Online
Title
09A
:
Uniform Commercial Code
Chapter
009
:
Secured Transactions
§
9-615. Application of proceeds of disposition; liability for deficiency and
right to surplus
(a) 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) 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) 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 commerically reasonable manner.
(d) 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) and permitted by subsection (c):
(1) unless
subsection (a)(4) 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) 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) 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) 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. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1,
2001; amended 2001, No. 46, § 9.)