Alabama § 7-9A-608 Application of Proceeds of Collection or Enforcement; Liability for Deficiency and Right to Surplus

Alabama Statutes

§ 7-9A-608 — Application of Proceeds of Collection or Enforcement; Liability for Deficiency and Right to Surplus

Alabama § 7-9A-608

JurisdictionAlabama

Title 7Commercial Code

Art. 9ASecured Transactions

Div. 1Default and Enforcement of Security Interest

Part 6Default

This text of Alabama § 7-9A-608 (Application of Proceeds of Collection or Enforcement; Liability for Deficiency and Right to Surplus) is published on Counsel Stack Legal Research, covering Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ala. Code § 7-9A-608 (2026).

Text

(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 7-9A-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 li

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(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 7-9A-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 a signed 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).
(3) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under Section 7-9A-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.