CHAPTER 6. Default [9601. - 9629.]

Law Codes -> Commercial Code -> Article 9601 to 9629

• 9601.

  (a)After default, a secured party has the rights provided in this chapter and, except as otherwise provided in Section 9602, those rights provided by agreement of the parties. A secured party may do both of the following:

  (1)Reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure.

  (2)If the collateral is documents, proceed either as to the documents or as to the goods they cover.

  (b)A secured party in possession of collateral or control of collateral under Section 7106, 9104, 9105, 9106, or 9107 has the rights and duties provided in Section 9207.

  (c)The rights under subdivisions (a) and (b) are cumulative and may be exercised simultaneously.

  (d)Except as otherwise provided in subdivision (g) and in Section 9605, after default, a debtor and an obligor have the rights provided in this chapter and by agreement of the parties.

  (e)If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of any of the following:

  (1)The date of perfection of the security interest or agricultural lien in the collateral.

  (2)The date of filing a financing statement covering the collateral.

  (3)Any date specified in a statute under which the agricultural lien was created.

  (f)A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this division.

  (g)Except as otherwise provided in subdivision (c) of Section 9607, this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.

• 9602.

  Except as otherwise provided in Section 9624, to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the following listed sections:

  (1)Subparagraph (C) of paragraph (4) of subdivision (b) of Section 9207, which deals with use and operation of the collateral by the secured party.

  (2)Section 9210, which deals with requests for an accounting and requests concerning a list of collateral and statement of account.

  (3)Subdivision (c) of Section 9607, which deals with collection and enforcement of collateral.

  (4)Subdivision (a) of Section 9608 and subdivision (c) of Section 9615 to the extent that they deal with application or payment of noncash proceeds of collection, enforcement, or disposition.

  (5)Subdivision (a) of Section 9608 and subdivision (d) of Section 9615 to the extent that they require accounting for or payment of surplus proceeds of collateral.

  (6)Section 9609 to the extent that it imposes upon a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace.

  (7)Subdivision (b) of Section 9610, and Sections 9611, 9613, and 9614, which deal with disposition of collateral.

  (8)Subdivision (f) of Section 9615, which deals with calculation of a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party, or a secondary obligor.

  (9)Section 9616, which deals with explanation of the calculation of a surplus or deficiency.

  (10)Section 9620, 9621, and 9622, which deal with acceptance of collateral in satisfaction of obligation.

  (11)Section 9623, which deals with redemption of collateral.

  (12)Section 9624, which deals with permissible waivers.

  (13)Sections 9625 and 9626, which deal with the existence of a deficiency and with the secured party's liability for failure to comply with this division.

• 9603.

  (a)The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in Section 9602 if the standards are not manifestly unreasonable.

  (b)Subdivision (a) does not apply to the duty under Section 9609 to refrain from breaching the peace.

• 9604.

  (a)If an obligation secured by a security interest in personal property or fixtures is also secured by an interest in real property or an estate therein:

  (1)The secured party may do any of the following:

  (A)Proceed, in any sequence, (i) in accordance with the secured party's rights and remedies in respect of real property as to the real property security, and (ii) in accordance with this chapter as to the personal property or fixtures.

  (B)Proceed in any sequence, as to both, some, or all of the real property and some or all of the personal property or fixtures in accordance with the secured party's rights and remedies in respect of the real property, by including the portion of the personal property or fixtures selected by the secured party in the judicial or nonjudicial foreclosure of the real property in accordance with the procedures applicable to real property. In proceeding under this subparagraph, (i) no provision of this chapter other than this subparagraph, subparagraph (C) of paragraph (4), and paragraphs (7) and (8) shall apply to any aspect of the foreclosure; (ii) a power of sale under the deed of trust or mortgage shall be exercisable with respect to both the real property and the personal property or fixtures being sold; and (iii) the sale may be conducted by the mortgagee under the mortgage or by the trustee under the deed of trust. The secured party shall not be deemed to have elected irrevocably to proceed as to both real property and personal property or fixtures as provided in this subparagraph with respect to any particular property, unless and until that particular property actually has been disposed of pursuant to a unified sale (judicial or nonjudicial) conducted in accordance with the procedures applicable to real property, and then only as to the property so sold.

  (C)Proceed, in any sequence, as to part of the personal property or fixtures as provided in subparagraph (A), and as to other of the personal property or fixtures as provided in subparagraph (B).

  (2)(A)Except as otherwise provided in paragraph (3), provisions and limitations of any law respecting real property and obligations secured by an interest in real property or an estate therein, including, but not limited to, Section 726 of the Code of Civil Procedure, provisions regarding acceleration or reinstatement of obligations secured by an interest in real property or an estate therein, prohibitions against deficiency judgments, limitations on deficiency judgments based on the value of the collateral, limitations on the right to proceed as to collateral, and requirements that a creditor resort either first or at all to its security, do not in any way apply to either (i) any personal property or fixtures other than personal property or fixtures as to which the secured party has proceeded or is proceeding under subparagraph (B) of paragraph (1), or (ii) the obligation.

  (B)Pursuant to, but without limiting subparagraph (A), in the event that an obligation secured by personal property or fixtures would otherwise become unenforceable by reason of Section 726 of the Code of Civil Procedure or any requirement that a creditor resort first to its security, then, notwithstanding that section or any similar requirement, the obligation shall nevertheless remain enforceable to the full extent necessary to permit a secured party to proceed against personal property or fixtures securing the obligation in accordance with the secured party's rights and remedies as permitted under this chapter.

  (3)(A)Paragraph (2) does not limit the application of Section 580b of the Code of Civil Procedure.

  (B)If the secured party commences an action, as defined in Section 22 of the Code of Civil Procedure, and the action seeks a monetary judgment on the debt, paragraph (2) does not prevent the assertion by the debtor or an obligor of any right to require the inclusion in the action of any interest in real property or an estate therein securing the debt. If a monetary judgment on the debt is entered in the action, paragraph (2) does not prevent the assertion by the debtor or an obligor of the subsequent unenforceability of the encumbrance on any interest in real property or an estate therein securing the debt and not included in the action.

  (C)Nothing in paragraph (2) shall be construed to excuse compliance with Section 2924c of the Civil Code as a prerequisite to the sale of real property, but that section has no application to the right of a secured party to proceed as to personal property or fixtures except, and then only to the extent that, the secured party is proceeding as to personal property or fixtures in a unified sale as provided in subparagraph (B) of paragraph (1).

  (D)Paragraph (2) does not deprive the debtor of the protection of Section 580d of the Code of Civil Procedure against a deficiency judgment following a sale of the real property collateral pursuant to a power of sale in a deed of trust or mortgage.

  (E)Paragraph (2) shall not affect, nor shall it determine the applicability or inapplicability of, any law respecting real property or obligations secured in whole or in part by real property with respect to a loan or a credit sale made to any individual primarily for personal, family, or household purposes.

  (F)Paragraph (2) does not deprive the debtor or an obligor of the protection of Section 580a of the Code of Civil Procedure following a sale of real property collateral.

  (G)If the secured party violates any statute or rule of law that requires a creditor who holds an obligation secured by an interest in real property or an estate therein to resort first to its security before resorting to any property of the debtor that does not secure the obligation, paragraph (2) does not prevent the assertion by the debtor or an obligor of any right to require correction of the violation, any right of the secured party to correct the violation, or the assertion by the debtor or an obligor of the subsequent unenforceability of the encumbrance on any interest in real property or an estate therein securing the obligation, or the assertion by the debtor or an obligor of the subsequent unenforceability of the obligation except to the extent that the obligation is preserved by subparagraph (B) of paragraph (2).

  (4)If the secured party realizes proceeds from the disposition of collateral that is personal property or fixtures, the following provisions shall apply:

  (A)The disposition of the collateral, the realization of the proceeds, the application of the proceeds, or any one or more of the foregoing shall not operate to cure any nonmonetary default.

  (B)The disposition of the collateral, the realization of the proceeds, the application of the proceeds, or any one or more of the foregoing shall not operate to cure any monetary default (although the application of the proceeds shall, to the extent of those proceeds, satisfy the secured obligation) so as to affect in any way the secured party's rights and remedies under this chapter with respect to any remaining personal property or fixtures collateral.

  (C)All proceeds so realized shall be applied by the secured party to the secured obligation in accordance with the agreement of the parties and applicable law.

  (5)An action by the secured party utilizing any available judicial procedure shall in no way be affected by omission of a prayer for a monetary judgment on the debt. Notwithstanding Section 726 of the Code of Civil Procedure, any prohibition against splitting causes of action or any other statute or rule of law, a judicial action which neither seeks nor results in a monetary judgment on the debt shall not preclude a subsequent action seeking a monetary judgment on the debt or any other relief.

  (6)As used in this subdivision, "monetary judgment on the debt" means a judgment for the recovery from the debtor of all or part of the principal amount of the secured obligation, including, for purposes of this subdivision, contractual interest thereon. "Monetary judgment on the debt" does not include a judgment which provides only for other relief (whether or not that other relief is secured by the collateral), such as one or more forms of nonmonetary relief, and monetary relief ancillary to any of the foregoing, such as attorneys' fees and costs incurred in seeking the relief.

  (7)If a secured party fails to comply with the procedures applicable to real property in proceeding as to both real and personal property under subparagraph (B) of paragraph (1), a purchaser for value of any interest in the real property at judicial or nonjudicial foreclosure proceedings conducted pursuant to subparagraph (B) of paragraph (1) takes that interest free from any claim or interest of another person, or any defect in title, based upon that noncompliance, unless:

  (A)The purchaser is the secured party and the failure to comply with this chapter occurred other than in good faith; or

  (B)The purchaser is other than the secured party and at the time of sale of the real property at that foreclosure the purchaser had knowledge of the failure to comply with this chapter and that the noncompliance occurred other than in good faith.

  Even if the purchaser at the foreclosure sale does not take his or her interest free of claims, interests, or title defects based upon that noncompliance with this chapter, a subsequent purchaser for value who acquires an interest in that real property from the purchaser at that foreclosure takes that interest free from any claim or interest of another person, or any defect in title, based upon that noncompliance, unless at the time of acquiring the interest the subsequent purchaser has knowledge of the failure to comply with this chapter and that the noncompliance occurred other than in good faith.

  (8)If a secured party proceeds by way of a unified sale under subparagraph (B) of paragraph (1), then, for purposes of applying Section 580a or subdivision (b) of Section 726 of the Code of Civil Procedure to any such unified sale, the personal property or fixtures included in the unified sale shall be deemed to be included in the "real property or other interest sold," as that term is used in Section 580a or subdivision (b) of Section 726 of the Code of Civil Procedure.

• 9605.

  A secured party does not owe a duty based on its status as secured party to either of the following persons:

  (1)To a person that is a debtor or obligor, unless the secured party knows all of the following:

  (A)That the person is a debtor or obligor.

  (B)The identity of the person.

  (C)How to communicate with the person.

  (2)To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows both of the following:

  (A)That the person is a debtor.

  (B)The identity of the person.

• 9606.

  For purposes of this chapter, a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created.

• 9607.

  (a)If so agreed, and in any event after default, a secured party may do all of the following:

  (1)Notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party.

  (2)Take any proceeds to which the secured party is entitled under Section 9315.

  (3)Enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral.

  (4)If it holds a security interest in a deposit account perfected by control under paragraph (1) of subdivision (a) of Section 9104, apply the balance of the deposit account to the obligation secured by the deposit account.

  (5)If it holds a security interest in a deposit account perfected by control under paragraph (2) or (3) of subdivision (a) of Section 9104, instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

  (b)If necessary to enable a secured party to exercise under paragraph (3) of subdivision (a) the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded both of the following:

  (1)A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage.

  (2)The secured party's sworn affidavit in recordable form stating both of the following:

  (A)That a default has occurred.

  (B)That the secured party is entitled to enforce the mortgage nonjudicially.

  (c)A secured party shall proceed in a commercially reasonable manner if both of the following apply with respect to the secured party:

  (1)It undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral.

  (2)It is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

  (d)A secured party may deduct from the collections made pursuant to subdivision (c) reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party.

  (e)This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

• 9608.

  (a)If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:

  (1)A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under Section 9607 in the following order to:

  (A)The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party.

  (B)The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made.

  (C)The satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed.

  (2)If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under subparagraph (C) of paragraph (1).

  (3)A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under Section 9607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

  (4)A secured party shall account to and pay a debtor for any surplus, and except as otherwise provided in subdivision (b) of Section 9626, the obligor is liable for any deficiency.

  (b)If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency. Subdivision (b) of Section 701.040 of the Code of Civil Procedure relating to the payment of proceeds applies only if the security agreement provides that the debtor is entitled to any surplus.

• 9609.

  (a)After default, a secured party may do both of the following:

  (1)Take possession of the collateral.

  (2)Without removal, render equipment unusable and dispose of collateral on a debtor's premises under Section 9610.

  (b)A secured party may proceed under subdivision (a) in either of the following ways:

  (1)Pursuant to judicial process.

  (2)Without judicial process, if it proceeds without breach of the peace.

  (c)If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.

• 9610.

  (a)After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.

  (b)Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

  (c)A secured party may purchase collateral at either of the following:

  (1)At a public disposition.

  (2)At a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.

  (d)A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.

  (e)A secured party may disclaim or modify warranties under subdivision (d) in either of the following ways:

  (1)In a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition.

  (2)By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

  (f)A record is sufficient to disclaim warranties under subdivision (e) if it indicates "There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition" or uses words of similar import.

• 9611.

  (a)In this section, "notification date" means the earlier of the date on which:

  (1)A secured party sends to the debtor and any secondary obligor an authenticated notification of disposition.

  (2)The debtor and any secondary obligor waive the right to notification.

  (b)Except as otherwise provided in subdivision (d), a secured party that disposes of collateral under Section 9610 shall send to the persons specified in subdivision (c) a reasonable authenticated notification of disposition.

  (c)To comply with subdivision (b), the secured party shall send an authenticated notification of disposition to all of the following persons:

  (1)The debtor.

  (2)Any secondary obligor.

  (3)If the collateral is other than consumer goods to both of the following persons:

  (A)Any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral.

  (B)Any other secured party or lienholder that, 10 days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement with respect to which all of the following apply:

  (i)It identified the collateral.

  (ii)It was indexed under the debtor's name as of that date.

  (iii)It was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date.

  (C)Any other secured party that, 10 days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in subdivision (a) of Section 9311.

  (d)Subdivision (b) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.

  (e)A secured party complies with the requirement for notification prescribed in subparagraph (B) of paragraph (3) of subsection (c) if it satisfies both of the following conditions:

  (1)Not later than 20 days or earlier than 30 days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in subparagraph (B) of paragraph (3) of subdivision (c).

  (2)Before the notification date, the secured party either:

  (A)Did not receive a response to the request for information.

  (B)Received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.

• 9612.

  (a)Except as otherwise provided in subdivision (b), whether a notification is sent within a reasonable time is a question of fact.

  (b)In a transaction other than a consumer transaction, a notification of disposition sent after default and 10 days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.

• 9613.

  Except in a consumer-goods transaction, the following rules apply:

  (1)The contents of a notification of disposition are sufficient if the notification does all of the following:

  (A)It describes the debtor and the secured party.

  (B)It describes the collateral that is the subject of the intended disposition.

  (C)It states the method of intended disposition.

  (D)It states that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting.

  (E)It states the time and place of a public disposition or the time after which any other disposition is to be made.

  (2)Whether the contents of a notification that lacks any of the information specified in paragraph (1) are nevertheless sufficient is a question of fact.

  (3)The contents of a notification providing substantially the information specified in paragraph (1) are sufficient, even if the notification includes either of the following:

  (A)Information not specified by that paragraph.

  (B)Minor errors that are not seriously misleading.

  (4)A particular phrasing of the notification is not required.

  (5)The following form of notification and the form appearing in subdivision (3) of Section 9614, when completed, each provides sufficient information:

  NOTIFICATION OF DISPOSITION OF COLLATERAL
  To:
  [Name of debtor, obligor, or other person to which the notification is sent]
  From:
  [Name, address, and telephone number of secured party]
  Name of Debtor(s):
  [Include only if debtor(s) are not an addressee]
  [For a public disposition:]
  We will sell [or lease or license, as applicable] the [describe collateral] [to the highest qualified bidder in public as follows:]
  Day and Date:
  Time:
  Place:
  [For a private disposition:]
  We will sell [or license, as applicable] the(describe collateral) privately sometime after [day and date].
  You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell [or lease or license, as applicable] [for a charge of $_____]. You may request anaccountingbycallingusat .
  	[telephone number]

• 9614.

  In a consumer-goods transaction, the following rules apply:

  (1)A notification of disposition must provide all of the following information:

  (A)The information specified in subdivision (1) of Section 9613.

  (B)A description of any liability for a deficiency of the person to which the notification is sent.

  (C)A telephone number from which the amount that must be paid to the secured party to redeem the collateral under Section 9623 is available.

  (D)A telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available.

  (2)A particular phrasing of the notification is not required.

  (3)The following form of notification, when completed, provides sufficient information:

  Name and address of secured party]
  [Date]
  NOTICE OF OUR PLAN TO SELL PROPERTY
  [Name and address of any obligor who is also a debtor]
  Subject:[Identification of Transaction]
  We have your[describe collateral], because you broke promises in our agreement.
  [For a public disposition:]
  We will sell[describe collateral], at public sale. A sale could include a lease or license. The sale will be held as follows:
  Date:
  Time:
  Place:
  You may attend the sale and bring bidders if you want.
  (For a public disposition pursuant to Section 9614(7)(A) or (7)(B)):
  We will sell(describe type of motor vehicle
  beginning on(date)
  by offering it for retail sale or lease to the general public through
  (select the applicable provision:)
  (A) Name of dealer
  Address of dealer
  You may inspect the motor vehicle and encourage people to purchase or lease it.
  (or)
  (B) Advertising it for sale to the general public to be purchased from (name of secured creditor)
  at (address where vehicle is to be sold)
  You may inspect the motor vehicle and encourage people to purchase or lease it.
  [For a private disposition:]
  We will sell[describe collateral] at private sale sometime. after[date].
  A sale could include a lease or license.
  The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you[will or will not, as applicable] still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.
  You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at [telephone number].
  If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at[telephone number] [or write us at [secured party's address]] and request a written explanation. [We will charge you $_____ for the explanation if we sent you another written explanation of the amount you owe us within the last six months.]
  If you need more information about the sale call us at[telephone number] [or write us at[secured party's address]].
  We are sending this notice to the following other people who have an interest in[describe collateral] or who owe money under your agreement:[Names of all other debtors and obligors, if any]

  (4)A notification in the form of subdivision (3) is sufficient, even if additional information appears at the end of the form.

  (5)A notification in the form of subdivision (3) is sufficient, even if it includes errors in information not required by subdivision (1), unless the error is misleading with respect to rights arising under this division.

  (6)If a notification under this section is not in the form of subdivision (3), law other than this division determines the effect of including information not required by subdivision (1).

  (7)If the collateral is a motor vehicle, a public disposition includes, but is not limited to, the following defined categories:

  (A)Retail disposition by a retail seller of motor vehicles who offers the collateral for sale or lease to the general public in the same manner as goods that the seller disposes of on the seller's own behalf.

  (B)Retail disposition made subsequent to advertising in a publication with a recognized ability to attract retail motor vehicle buyers and lessees and in a manner designed to reach the retail buying and leasing public for vehicles of that type and condition.

  (8)For dispositions under subparagraphs (A) and (B) of paragraph (7), the secured creditor shall ensure that the consumer has reasonable access to the motor vehicle in question in order to be able to exercise the right to inspect the motor vehicle.

  (9) Nothing in this section shall be construed to alter or disturb any right to inspect a consumer good prior to sale under existing law.

• 9615.

  (a)A secured party shall apply or pay over for application the cash proceeds of disposition under Section 9610 in the following order to each of the following:

  (1)The reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party.

  (2)The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made.

  (3)The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral and to the satisfaction of any subordinate attachment lien or execution lien pursuant to subdivision (b) of Section 701.040 of the Code of Civil Procedure if both of the following conditions are satisfied:

  (A)The secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds or notice of the levy of attachment or execution before distribution of the proceeds is completed.

  (B)In a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor.

  (4)A secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.

  (b)If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under paragraph (3) of subdivision (a).

  (c)A secured party need not apply or pay over for application noncash proceeds of disposition under Section 9610 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

  (d)If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subdivision (a) and permitted by subdivision (c), both of the following apply:

  (1)Unless paragraph (4) of subdivision (a) requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus except as provided in Section 701.040 of the Code of Civil Procedure.

  (2)Subject to subdivision (b) of Section 9626, the obligor is liable for any deficiency.

  (e)(1)If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, both of the following apply:

  (A)The debtor is not entitled to any surplus.

  (B)The obligor is not liable for any deficiency.

  (2)Subdivision (b) of Section 701.040 of the Code of Civil Procedure relating to the payment of proceeds and the liability of the secured party applies only if the security agreement provides that the debtor is entitled to any surplus.

  (f)The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this chapter to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if both of the following apply:

  (1)The transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor.

  (2)The amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

  (g)The following rules apply with respect to a secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:

  (1)The secured party takes the cash proceeds free of the security interest or other lien.

  (2)The secured party is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien.

  (3)The secured party is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

• 9616.

  (a)In this section:

  (1)"Explanation" means a writing that contains all of the following:

  (A)States the amount of the surplus or deficiency.

  (B)Provides an explanation in accordance with subdivision (c) of how the secured party calculated the surplus or deficiency.

  (C)States, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates, and expenses may affect the amount of the surplus or deficiency.

  (D)Provides a telephone number or mailing address from which additional information concerning the transaction is available.

  (2)"Request" means a record that is all of the following:

  (A)Authenticated by a debtor or consumer obligor.

  (B)Requesting that the recipient provide an explanation.

  (C)Sent after disposition of the collateral under Section 9610.

  (b)In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under Section 9615, the secured party shall do either of the following:

  (1)Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and in accordance with both of the following:

  (A)Before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency.

  (B)Within 14 days after receipt of a request.

  (2)In the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency.

  (c)To comply with subparagraph (B) of paragraph (1) of subdivision (a), a writing must provide the following information in the following order:

  (1)The aggregate amount of obligations secured by the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date in accordance with either of the following:

  (A)If the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession.

  (B)If the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition.

  (2)The amount of proceeds of the disposition.

  (3)The aggregate amount of the obligations after deducting the amount of proceeds.

  (4)The amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing, and disposing of the collateral, and attorney's fees secured by the collateral which are known to the secured party and relate to the current disposition.

  (5)The amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in paragraph (1).

  (6)The amount of the surplus or deficiency.

  (d)A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of subdivision (a) is sufficient, even if it includes minor errors that are not seriously misleading.

  (e)A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to paragraph (1) of subdivision (b). The secured party may require payment of a charge not exceeding twenty-five dollars ($25) for each additional response.

• 9617.

  (a)A secured party's disposition of collateral after default does all of the following:

  (1)Transfers to a transferee for value all of the debtor's rights in the collateral.

  (2)Discharges the security interest under which the disposition is made.

  (3)Discharges any subordinate security interest or other subordinate lien.

  (b)A transferee that acts in good faith takes free of the rights and interests described in subdivision (a), even if the secured party fails to comply with this division or the requirements of any judicial proceeding.

  (c)If a transferee does not take free of the rights and interests described in subdivision (a), the transferee takes the collateral subject to all of the following:

  (1)The debtor's rights in the collateral.

  (2)The security interest or agricultural lien under which the disposition is made.

  (3)Any other security interest or other lien.

• 9618.

  (a)A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after any of the following occurs:

  (1)The secondary obligor receives an assignment of a secured obligation from the secured party.

  (2)The secondary obligor receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party.

  (3)The secondary obligor is subrogated to the rights of a secured party with respect to collateral.

  (b)Both of the following rules apply with respect to an assignment, transfer, or subrogation described in subdivision (a):

  (1)It is not a disposition of collateral under Section 9610.

  (2)It relieves the secured party of further duties under this division.

• 9619.

  (a)In this section, "transfer statement" means a record authenticated by a secured party stating all of the following:

  (1)That the debtor has defaulted in connection with an obligation secured by specified collateral.

  (2)That the secured party has exercised its postdefault remedies with respect to the collateral.

  (3)That, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral.

  (4)The name and mailing address of the secured party, debtor, and transferee.

  (b)A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration, or certificate of title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall do all of the following:

  (1)Accept the transfer statement.

  (2)Promptly amend its records to reflect the transfer.

  (3)If applicable, issue a new appropriate certificate of title in the name of the transferee.

  (c)A transfer of the record or legal title to collateral to a secured party under subdivision (b) or otherwise is not of itself a disposition of collateral under this division and does not of itself relieve the secured party of its duties under this division.

• 9620.

  (a)Except as otherwise provided in subdivision (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if all of the following conditions are satisfied:

  (1)The debtor consents to the acceptance under subdivision (c).

  (2)The secured party does not receive, within the time set forth in subdivision (d), a notification of objection to the proposal authenticated by either of the following:

  (A)A person to which the secured party was required to send a proposal under Section 9621.

  (B)Any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal.

  (3)If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance.

  (4)Subdivision (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to Section 9624.

  (b)A purported or apparent acceptance of collateral under this section is ineffective unless both of the following conditions are satisfied:

  (1)The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor.

  (2)The conditions of subdivision (a) are met.

  (c)For purposes of this section both of the following rules apply:

  (1)A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default.

  (2)A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party does all of the following:

  (A)Sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained.

  (B)In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures.

  (C)Does not receive a notification of objection authenticated by the debtor within 20 days after the proposal is sent.

  (d)To be effective under paragraph (2) of subdivision (a), a notification of objection must be received by the secured party as follows:

  (1)In the case of a person to which the proposal was sent pursuant to Section 9621, within 20 days after notification was sent to that person.

  (2)In other cases, in accordance with either of the following:

  (A)Within 20 days after the last notification was sent pursuant to Section 9621.

  (B)If a notification was not sent, before the debtor consents to the acceptance under subdivision (c).

  (e)A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Section 9610 within the time specified in subdivision (f) if either of the following conditions has been satisfied:

  (1)Sixty percent of the cash price has been paid in the case of a purchase money security interest in consumer goods.

  (2)Sixty percent of the principal amount of the obligation secured has been paid in the case of a nonpurchase money security interest in consumer goods.

  (f)To comply with subdivision (e), the secured party shall dispose of the collateral within either of the following time periods:

  (1)Within 90 days after taking possession.

  (2)Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

  (g)In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

• 9621.

  (a)A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to all of the following persons:

  (1)Any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral.

  (2)Any other secured party or lienholder that, 10 days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that satisfied all of the following conditions:

  (A)It identified the collateral.

  (B)It was indexed under the debtor's name as of that date.

  (C)It was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date.

  (3)Any other secured party that, 10 days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in subdivision (a) of Section 9311.

  (b)A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in subdivision (a).

• 9622.

  (a)A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures does all of the following:

  (1)It discharges the obligation to the extent consented to by the debtor.

  (2)It transfers to the secured party all of a debtor's rights in the collateral.

  (3)It discharges the security interest or agricultural lien that is the subject of the debtor's consent and any subordinate security interest or other subordinate lien.

  (4)It terminates any other subordinate interest.

  (b)A subordinate interest is discharged or terminated under subdivision (a), even if the secured party fails to comply with this division.

• 9623.

  (a)A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral.

  (b)To redeem collateral, a person shall tender both of the following:

  (1)Fulfillment of all obligations secured by the collateral.

  (2)The reasonable expenses and attorney's fees described in paragraph (1) of subdivision (a) of Section 9615.

  (c)A redemption may occur at any time before a secured party has done any of the following:

  (1)Collected collateral under Section 9607.

  (2)Disposed of collateral or entered into a contract for its disposition under Section 9610.

  (3)Accepted collateral in full or partial satisfaction of the obligation it secures under Section 9622.

• 9624.

  (a)A debtor or secondary obligor may waive the right to notification of disposition of collateral under Section 9611 only by an agreement to that effect entered into and authenticated after default.

  (b)A debtor may waive the right to require disposition of collateral under subdivision (e) of Section 9620 only by an agreement to that effect entered into and authenticated after default.

  (c)Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under Section 9623 only by an agreement to that effect entered into and authenticated after default.

• 9625.

  (a)If it is established that a secured party is not proceeding in accordance with this division, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.

  (b)Subject to subdivisions (c), (d), and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with this division. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.

  (c)Except as otherwise provided in Section 9628, a person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subdivision (b) for its loss.

  (d)A debtor whose deficiency is eliminated under Section 9626 may recover damages for the loss of any surplus. However, in a transaction other than a consumer transaction, a debtor or secondary obligor whose deficiency is eliminated or reduced under Section 9626 may not otherwise recover under subdivision (b) for noncompliance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance.

  (e)In addition to any damages recoverable under subdivision (b), the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover five hundred dollars ($500) in each case from any of the following persons:

  (1)A person that fails to comply with Section 9208.

  (2)A person that fails to comply with Section 9209.

  (3)A person that files a record that the person is not entitled to file under subdivision (a) of Section 9509.

  (4)A person that fails to cause the secured party of record to file or send a termination statement as required by subdivision (a) or (c) of Section 9513.

  (5)A person that fails to comply with paragraph (1) of subdivision (b) of Section 9616 and whose failure is part of a pattern, or consistent with a practice, of noncompliance.

  (6)A person that fails to comply with paragraph (2) of subdivision (b) of Section 9616.

  (f)A debtor or consumer obligor may recover damages under subdivision (b) and, in addition, five hundred dollars ($500) in each case from a person that, without reasonable cause, fails to comply with a request under Section 9210. A recipient of a request under Section 9210 which never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subdivision.

  (g)If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Section 9210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.

• 9626.

  (a)In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

  (1)A secured party need not prove compliance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue.

  (2)If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this chapter.

  (3)Except as otherwise provided in Section 9628, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney's fees exceeds the greater of either of the following:

  (A)The proceeds of the collection, enforcement, disposition, or acceptance.

  (B)The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance.

  (4)For purposes of subparagraph (B) of paragraph (3), the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney's fees unless the secured party proves that the amount is less than that sum.

  (5)If a deficiency or surplus is calculated under subdivision (f) of Section 9615, the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

  (b)In a consumer transaction, the following rules apply:

  (1)In an action in which a deficiency or a surplus is an issue:

  (A)A secured party has the burden of proving compliance with the provisions of this chapter relating to collection, enforcement, disposition, and acceptance whether or not the debtor or a secondary obligor places the secured party's compliance in issue.

  (B)If a deficiency or surplus is calculated under subdivision (f) of Section 9615, the secured party has the burden of establishing that the amount of proceeds of the disposition is not significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

  (2)The debtor or any secondary obligor is liable for any deficiency only if all of the following conditions are met:

  (A)It is not otherwise agreed or otherwise provided in the Retail Installment Sales Act (Chapter 1 (commencing with Section 1801), Title 2, Part 4, Division 3, Civil Code), and, in particular, Section 1812.5 of the Civil Code or any other statute.

  (B)The debtor and obligor were given notice, in accordance with Sections 9611, 9612, and 9613, or Section 9614, as applicable, of the disposition of the collateral.

  (C)The collection, enforcement, disposition, and acceptance by the secured party were conducted in good faith and in a commercially reasonable manner.

  (3)Upon entry of a final judgment that the debtor or obligor is not liable for a deficiency by reason of paragraph (2) or subdivision (f) of Section 9615, the secured party may neither obtain a deficiency judgment nor retain a security interest in any other collateral of the debtor or obligor that secured the indebtedness for which the debtor or obligor is no longer liable.

  (4)If, subsequent to a disposition that does not satisfy any one or more of the conditions set forth in paragraph (2), or subsequent to a disposition that is subject to subdivision (f) of Section 9615, the secured party disposes pursuant to this section of other collateral securing the same indebtedness, the debtor or obligor may, to the extent he or she is no longer liable for a deficiency judgment by reason of paragraph (2) or subdivision (f) of Section 9615, recover the proceeds realized from the subsequent dispositions, as well as any damages to which the debtor may be entitled if the subsequent disposition is itself noncomplying or otherwise wrongful.

  (5)Nothing herein shall deprive the debtor of any right to recover damages from the secured party under subdivision (b) of Section 9625, or to offset any such damages against any claim by the secured party for a deficiency, or of any right or remedy to which the debtor may be entitled under any other law. A debtor or obligor in a consumer transaction shall not have any damages owed to it reduced by the amount of any deficiency that would have resulted had the disposition of the collateral by the secured party been conducted in conformity with this division.

  (6)The secured party shall account to the debtor for any surplus, except as provided in Section 701.040 of the Code of Civil Procedure.

• 9627.

  (a)The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner.

  (b)A disposition of collateral is made in a commercially reasonable manner if the disposition satisfies any of the following conditions:

  (1)It is made in the usual manner on any recognized market.

  (2)It is made at the price current in any recognized market at the time of the disposition.

  (3)It is made otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

  (c)A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved in or by any of the following:

  (1)In a judicial proceeding.

  (2)By a bona fide creditors' committee.

  (3)By a representative of creditors.

  (4)By an assignee for the benefit of creditors.

  (d)Approval under subdivision (c) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.

• 9628.

  (a)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 both of the following rules apply:

  (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 division.

  (2)The secured party's failure to comply with this division does not affect the liability of the person for a deficiency.

  (b)A secured party is not liable because of its status as secured party to either of the following persons:

  (1)To a person that is a debtor or obligor, unless the secured party knows all of the following:

  (A)That the person is a debtor or obligor.

  (B)The identity of the person.

  (C)How to communicate with the person.

  (2)To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows both of the following:

  (A)That the person is a debtor.

  (B)The identity of the person.

  (c)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 either of the following representations:

  (1)A debtor's representation concerning the purpose for which collateral was to be used, acquired, or held.

  (2)An obligor's representation concerning the purpose for which a secured obligation was incurred.

  (d)A secured party is not liable under paragraph (2) of subdivision (c) of Section 9625 more than once with respect to any one secured obligation.

• 9629.

  No renunciation or modification by the debtor of any of his or her rights under this chapter as to consumer goods shall be valid or enforceable unless the renunciation or modification is in consideration of a waiver by the secured party of any right to a deficiency on the debt.