§ 554.12502 — Creditor process served on receiving bank — setoff by beneficiary’s bank

Iowa § 554.12502

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

Text

1. As used in this section, “creditor process” means levy, attachment, garnishment, notice
of lien, sequestration, or similar process issued by or on behalf of a creditor or other claimant
with respect to an account.
2. This subsection applies to the creditor process with respect to an authorized account
of the sender of a payment order if the creditor process is served on the receiving bank. For
the purpose of determining the rights of the parties with respect to the creditor process, if the
receiving bank accepts the payment order, the balance in the authorized account is deemed
to be reduced by the amount of the payment order to the extent the bank did not otherwise
receive payment of the order, unless the creditor process is served at a time and in a manner
affording the bank a reasonable opportunity to act on it before the bank accepts the payment
order.
3. If a beneficiary’s bank has received a payment order for payment to the beneficiary’s
account in the bank, the following rules apply:
a. The beneficiary’s bank may credit the beneficiary’s account. The amount credited may
be set off against an obligation owed by the beneficiary to the bank or may be applied to
satisfy a creditor process served on the bank with respect to the account.
b. The beneficiary’s bank may credit the beneficiary’s account and allow withdrawal of
the amount credited unless a creditor process with respect to the account is served at a time
and in a manner affording the beneficiary’s bank a reasonable opportunity to act to prevent
withdrawal.
c. If a creditor process with respect to the beneficiary’s account has been served and the
beneficiary’s bank has had a reasonable opportunity to act on it, the beneficiary’s bank may
not reject the payment order except for a reason unrelated to the service of process.
4. Creditorprocesswithrespecttoapaymentbytheoriginatortothebeneficiarypursuant
to a funds transfer may be served only on the beneficiary’s bank with respect to the debt
owed by that bank to the beneficiary. Any other bank served with the creditor process is not
required to act with respect to the process.