§ 9-620 — Acceptance of Collateral in Full or Partial Satisfaction of Obligation; Compulsory Disposition of Collateral

New York § 9-620

• Jurisdiction: New York
• Law UCC: Uniform Commercial Code
• Part 6: Default
• Subpart 1: Default and Enforcement of Security Interest
• Art. 9: Secured Transactions

Text

Section 9--620. Acceptance of Collateral in Full or Partial Satisfaction\n of Obligation; Compulsory Disposition of Collateral.\n (a) Conditions to acceptance in satisfaction. Except as otherwise\nprovided in subsections (g) and (h), a secured party may accept\ncollateral in full or partial satisfaction of the obligation it secures\nonly if:\n (1) the debtor consents to the acceptance under subsection (c);\n (2) the secured party does not receive, within the time set forth\n in subsection (d), a notification of objection to the\n proposal authenticated by:\n (A) a person to which the secured party was required to send\n a proposal under Section 9--621; or\n (B) any other person, other than the debtor, holding an\n interest in the collateral subordinate to the security\n interest that is the subject of the proposal;\n (3) if the collateral is consumer goods, the collateral is not in\n the possession of the debtor when the debtor consents to the\n acceptance; and\n (4) subsection (e) does not require the secured party to dispose\n of the collateral or the debtor waives the requirement\n pursuant to Section 9--624.\n (b) Purported acceptance ineffective. A purported or apparent\nacceptance of collateral under this section is ineffective unless:\n (1) the secured party consents to the acceptance in an\n authenticated record or sends a proposal to the debtor; and\n (2) the conditions of subsection (a) are met.\n (c) Debtor's consent. For purposes of this section:\n (1) a debtor consents to an acceptance of collateral in partial\n satisfaction of the obligation it secures only if the debtor\n agrees to the terms of the acceptance in a record\n authenticated after default; and\n (2) a debtor consents to an acceptance of collateral in full\n satisfaction of the obligation it secures only if the debtor\n agrees to the terms of the acceptance in a record\n authenticated after default or the secured party:\n (A) sends to the debtor after default a proposal that is\n unconditional or subject only to a condition that\n collateral not in the possession of the secured party be\n preserved or maintained;\n (B) in the proposal, proposes to accept collateral in full\n satisfaction of the obligation it secures; and\n (C) does not receive a notification of objection\n authenticated by the debtor within twenty days after the\n proposal is sent.\n (d) Effectiveness of notification. To be effective under subsection\n(a)(2), a notification of objection must be received by the secured\nparty:\n (1) in the case of a person to which the proposal was sent\n pursuant to Section 9--621, within 20 days after notification\n was sent to that person; and\n (2) in other cases:\n (A) within 20 days after the last notification was sent\n pursuant to Section 9--621; or\n (B) if a notification was not sent, before the debtor\n consents to the acceptance under subsection (c).\n (e) Mandatory disposition of consumer goods. A secured party that has\ntaken possession of collateral shall dispose of the collateral pursuant\nto Section 9--610 within the time specified in subsection (f) if:\n (1) sixty percent of the cash price has been paid in the case of\n a purchase-money security interest in consumer goods; or\n (2) sixty percent of the principal amount of the obligation\n secured has been paid in the case of a non-purchase-money\n security interest in consumer goods.\n (f) Compliance with mandatory disposition requirement. To comply with\nsubsection (e), the secured party shall dispose of the collateral:\n (1) within 90 days after taking possession; or\n (2) within any longer period to which the debtor and all\n secondary obligors have agreed in an agreement to that effect\n entered into and authenticated after default.\n (g) No partial satisfaction in consumer transaction. In a consumer\ntransaction, a secured party may not accept collateral in partial\nsatisfaction of the obligation it secures.\n (h) Special provisions for cooperative interests. A secured party\nwhose collateral consists of a residential cooperative interest used by\nthe debtor and whose security interest in such collateral secures an\nobligation incurred in connection with financing or refinancing of the\nacquisition of such cooperative interest and who chooses to accept that\ncooperative interest in full satisfaction of the debtor's obligation may\ndo so.\n (1) If the secured party sends a proposal to take the cooperative\ninterest in full satisfaction of the debtor's obligation, the proposal\nshall be accompanied by a notice in the form and manner prescribed in\nsubsection (f) of section 9-611 of this subpart, unless the secured\nparty has previously sent the debtor such notice. A debtor consents to\nan acceptance of a cooperative interest in full satisfaction of the\nobligation it secures only if the debtor agrees to the terms of the\nproposal in a record authenticated after default.\n (2) A debtor may propose to the secured party that it take the\ncooperative interest in full satisfaction of the obligation it secures.\nThe proposal shall be ineffective unless the secured party consents to\nthe proposal in an authenticated record.\n