§ 10:9-628 — Nonliability and limitation on liability of secured party; liability of secondary

§9-628. Nonliability and limitation on liability of secured party; liability of secondary
obligor
(a) Limitation of liability of secured party for noncompliance with Chapter. Subject
to Subsection (f) of this Section, unless a secured party knows that a person is a debtor or
obligor, knows the identity of the person, and knows how to communicate with the person:
(1) the secured party is not liable to the person, or to a secured party or lienholder
that has filed a financing statement against the person, for failure to comply with this
Chapter; and
(2) the secured party's failure to comply with this Chapter does not affect the liability
of the person for a deficiency.
(b) Limitation of liability based on status as secured party. Subject to Subsection (f)
of this Section, a secured party is not liable because of its status as secured party:
(1) to a person that is a debtor or obligor, unless the secured party knows:
(A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a financing statement against a
person, unless the secured party knows:
(A) that the person is a debtor; and
(B) the identity of the person.
(c) Limitation of liability if reasonable belief that transaction not a consumer-goods
transaction or consumer transaction. A secured party is not liable to any person, and a
person's liability for a deficiency is not affected, because of any act or omission arising out
of the secured party's reasonable belief that a transaction is not a consumer-goods transaction
or a consumer transaction or that goods are not consumer goods, if the secured party's belief
is based on its reasonable reliance on:
(1) a debtor's representation concerning the purpose for which collateral was to be
used, acquired, or held; or
(2) an obligor's representation concerning the purpose for which a secured obligation
was incurred.
(d) [Reserved.]
(e) [Reserved.]
(f) Exception: Limitation of liability under Subsections (a) and (b) does not apply.
Subsections (a) and (b) of this Section do not apply to limit the liability of a secured party
to a person if, at the time the secured party obtains control of collateral that is a controllable
account, controllable electronic record, or controllable payment intangible or at the time the
security interest attaches to the collateral, whichever is later:
(1) the person is a debtor or obligor; and
(2) the secured party knows that the information in Subparagraph (b)(1)(A), (B), or
(C) of this Section relating to the person is not provided by the collateral, a record attached
to or logically associated with the collateral, or the system in which the collateral is recorded.

Legislative History

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