New York § 9-407 Restrictions on Creation or Enforcement of Security Interest in Leasehold Interest or in Lessor's Residual Interest

New York Statutes

§ 9-407 — Restrictions on Creation or Enforcement of Security Interest in Leasehold Interest or in Lessor's Residual Interest

New York § 9-407

Law UCCUniform Commercial Code

Part 4Rights of Third Parties

Art. 9Secured Transactions

This text of New York § 9-407 (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 New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

N.Y. Uniform Commercial Code § 9-407 (2026).

Text

Section 9--407. Restrictions on Creation or Enforcement of Security\n                  Interest in Leasehold Interest or in Lessor's Residual\n                  Interest.\n  (a) Term restricting assignment generally ineffective. Except as\notherwise provided in subsection (b), a term in a lease agreement is\nineffective to the extent that it:\n       (1) prohibits, restricts, or requires the consent of a party to\n           the lease to the assignment or transfer of, or the creation,\n           attachment, perfection, or enforcement of a security interest\n           in, an interest of a party under the lease contract or in the\n           lessor's residual interest in the goods; or\n       (2) provides that the assignment or transfer or the creation,\n           attachment, perfection, 

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Section 9--407. Restrictions on Creation or Enforcement of Security\n Interest in Leasehold Interest or in Lessor's Residual\n Interest.\n (a) Term restricting assignment generally ineffective. Except as\notherwise provided in subsection (b), a term in a lease agreement is\nineffective to the extent that it:\n (1) prohibits, restricts, or requires the consent of a party to\n the lease to the assignment or transfer of, or the creation,\n attachment, perfection, or enforcement of a security interest\n in, an interest of a party under the lease contract or in the\n lessor's residual interest in the goods; or\n (2) provides that the assignment or transfer or the creation,\n attachment, perfection, or enforcement of the security\n interest may give rise to a default, breach, right of\n recoupment, claim, defense, termination, right of\n termination, or remedy under the lease.\n (b) Effectiveness of certain terms. Except as otherwise provided in\nSection 2-A-303(7), a term described in subsection (a)(2) is effective\nto the extent that there is:\n (1) a transfer by the lessee of the lessee's right of possession\n or use of the goods in violation of the term; or\n (2) a delegation of a material performance of either party to the\n lease contract in violation of the term.\n (c) Security interest not material impairment. The creation,\nattachment, perfection, or enforcement of a security interest in the\nlessor's interest under the lease contract or the lessor's residual\ninterest in the goods is not a transfer that materially impairs the\nlessee's prospect of obtaining return performance or materially changes\nthe duty of or materially increases the burden or risk imposed on the\nlessee within the purview of Section 2-A-303(4) unless, and then only to\nthe extent that, enforcement actually results in a delegation of\nmaterial performance of the lessor.\n