§9-615. Application of proceeds of disposition; liability for deficiency and right to

Link to law: http://legislature.vermont.gov/statutes/section/09A/009/00615
Published: 2015

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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.)
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