Indiana § 26-1-9.1-407 Restrictions on creation or enforcement of security interest in leasehold
interest or in lessor's residual interest

Indiana Statutes

§ 26-1-9.1-407 — Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest

Indiana § 26-1-9.1-407

Title 26COMMERCIAL LAW

Art. 1UNIFORM COMMERCIAL CODE

Ch. 9.1Secured Transactions

This text of Indiana § 26-1-9.1-407 (Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest) is published on Counsel Stack Legal Research, covering Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ind. Code § 26-1-9.1-407 (2026).

Text

(a)Except as otherwise provided in subsection (b), a term in a lease agreement is ineffective to the extent that it:

(1)prohibits, restricts, or requires the consent of a party to the lease to the assignment, transfer, creation, attachment, perfection, or enforcement of a security interest in an interest of a party under the lease contract or in the lessor's residual interest in the goods; or

(2)provides that the assignment, transfer, creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease.

(b)Except as otherwise provided in IC 26-1-2.1-303(7), a term described in subsection (a)(2) is effective to the extent that there is:

(1)a transfe

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(a) Except as otherwise provided in
subsection (b), a term in a lease agreement is ineffective to the extent
that it:
(1) prohibits, restricts, or requires the consent of a party to the
lease to the assignment, transfer, creation, attachment, perfection,
or enforcement of a security interest in an interest of a party under
the lease contract or in the lessor's residual interest in the goods;
or
(2) provides that the assignment, transfer, creation, attachment,
perfection, or enforcement of the security interest may give rise
to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the lease.
(b) Except as otherwise provided in IC 26-1-2.1-303(7), a term
described in subsection (a)(2) is effective to the extent that there is:
(1) a transfer by the lessee of the lessee's right of possession or
use of the goods in violation of the term; or
(2) a delegation of a material performance of either party to the
lease contract in violation of the term.
(c) The creation, attachment, perfection, or enforcement of a
security interest in the lessor's interest under the lease contract or the
lessor's residual interest in the goods is not a transfer that materially
impairs the lessee's prospect of obtaining return performance or
materially changes the duty of or materially increases the burden or risk
imposed on the lessee within the purview of IC 26-1-2.1-303(4) unless,
and then only to the extent that, enforcement actually results in a
delegation of material performance of the lessor.