South Dakota § 57A-9-407 Ineffective prohibitions or restrictions in lease agreement.

South Dakota Statutes

§ 57A-9-407 — Ineffective prohibitions or restrictions in lease agreement.

South Dakota § 57A-9-407

Title 57AUNIFORM COMMERCIAL CODE

Ch. 57A-6SECURED TRANSACTIONS

This text of South Dakota § 57A-9-407 (Ineffective prohibitions or restrictions in lease agreement.) is published on Counsel Stack Legal Research, covering South Dakota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

S.D. Codified Laws § 57A-9-407 (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 or transfer of, or the 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 or transfer or the 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 § 57A-2A-303(7), a term described in subsection (a)(2) is effective to the extent that

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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 or transfer of, or the 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 or transfer or the 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 § 57A-2A-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 § 57A-2A-303(4) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.