§ 10:9-608 — Application of proceeds of collection or enforcement; liability for deficiency and

Louisiana § 10:9-608

• Jurisdiction: Louisiana
• Title 10: Commercial Laws

Text

§9-608. Application of proceeds of collection or enforcement; liability for deficiency and
right to surplus
(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 R.S. 10:9-607 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
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 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 R.S. 10:9-607 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.

Legislative History

Acts 2001, No. 128, §1, eff. July 1, 2001; Acts 2024, No. 773, §1.