TITLE 6A

Uniform Commercial Code

CHAPTER 6A-9

Secured Transactions

PART 6A-9-601

Default

SECTION 6A-9-615



   § 6A-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 § 6A-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:



   (i) 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



   (ii) 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 § 6A-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) 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) 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.



History of Section.

(P.L. 2000, ch. 182, § 6; P.L. 2000, ch. 420, § 6.)