70A-9a-620 - Acceptance of collateral in full or partial satisfaction of obligation -- Compulsory disposition of collateral.
70A-9a-620. Acceptance of collateral in full or partial satisfaction of obligation --Compulsory disposition of collateral.
(1) Except as otherwise provided in Subsection (7), a secured party may accept collateralin full or partial satisfaction of the obligation it secures only if:
(a) the debtor consents to the acceptance under Subsection (3);
(b) the secured party does not receive, within the time set forth in Subsection (4), anotification of objection to the proposal authenticated by:
(i) a person to which the secured party was required to send a proposal under Section70A-9a-621; or
(ii) any other person, other than the debtor, holding an interest in the collateralsubordinate to the security interest that is the subject of the proposal;
(c) if the collateral is consumer goods, the collateral is not in the possession of the debtorwhen the debtor consents to the acceptance; and
(d) Subsection (5) does not require the secured party to dispose of the collateral or thedebtor waives the requirement pursuant to Section 70A-9a-624.
(2) A purported or apparent acceptance of collateral under this section is ineffectiveunless:
(a) the secured party consents to the acceptance in an authenticated record or sends aproposal to the debtor; and
(b) the conditions of Subsection (1) are met.
(3) For purposes of this section:
(a) a debtor consents to an acceptance of collateral in partial satisfaction of the obligationit secures only if the debtor agrees to the terms of the acceptance in a record authenticated afterdefault; and
(b) a debtor consents to an acceptance of collateral in full satisfaction of the obligation itsecures only if the debtor agrees to the terms of the acceptance in a record authenticated afterdefault or the secured party:
(i) sends to the debtor after default a proposal that is unconditional or subject only to acondition that collateral not in the possession of the secured party be preserved or maintained;
(ii) in the proposal, proposes to accept collateral in full satisfaction of the obligation itsecures; and
(iii) does not receive a notification of objection authenticated by the debtor within 20 daysafter the proposal is sent.
(4) To be effective under Subsection (1)(b), a notification of objection must be receivedby the secured party:
(a) in the case of a person to which the proposal was sent pursuant to Section70A-9a-621, within 20 days after notification was sent to that person; and
(b) in other cases:
(i) within 20 days after the last notification was sent pursuant to Section 70A-9a-621; or
(ii) if a notification was not sent, before the debtor consents to the acceptance underSubsection (3).
(5) A secured party that has taken possession of collateral shall dispose of the collateralpursuant to Section 70A-9a-610 within the time specified in Subsection (6) if:
(a) 60% of the cash price has been paid in the case of a purchase-money security interestin consumer goods; or
(b) 60% of the principal amount of the obligation secured has been paid in the case of anon-purchase-money security interest in consumer goods.
(6) To comply with Subsection (5), the secured party shall dispose of the collateral:
(a) within 90 days after taking possession; or
(b) within any longer period to which the debtor and all secondary obligors have agreedin an agreement to that effect entered into and authenticated after default.
(7) In a consumer transaction, a secured party may not accept collateral in partialsatisfaction of the obligation it secures.
Enacted by Chapter 252, 2000 General Session