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The UCC, or Uniform Commercial Code, is a set of laws intended to unify commercial transactions across state lines. There are many articles within the UCC and even more regulations within each piece. One particular section is UCC 9-607 - but what goes in this portion of the UCC?
UCC 9-607 deals with the Collection And Enforcement By Secured Party. It speaks on collection and enforcement, expenses involved, duties in the collection and enforcement, and more.
If you’re interested in learning more about UCC 9-607, you’re in the right place. No matter who you are and why you’re trying to learn about the Universal Commercial Code, it’s always valuable to increase your knowledge. Read on to learn more about UCC 9-607, including what it states and the definitions of various terms within the law.
What is UCC 9-607?
UCC 9-607 is in Article 9 of the Uniform Commercial Code. It speaks on the Collection And Enforcement By Secured Party.
Here is the official definition of UCC 9-607 according to the Cornell Law School Legal Information Institute:
(a) .Collection and enforcement generally..
If so agreed, and in any event after default, a secured party:
(1) may 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) may take any proceeds to which the secured party is entitled under Section 9-315;
(3) may 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 Section 9-104(a)(1), may apply the balance of the deposit account to the obligation secured by the deposit account; and
(5) if it holds a security interest in a deposit account perfected by control under Section 9-104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.
(b) .Non Judicial enforcement of mortgage..
If necessary to enable a secured party to exercise under subsection (a)(3) the right of a debtor to enforce a mortgage non judicially, the secured party may record in the office in which a record of the mortgage is recorded:
(1) a copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and
(2) the secured party's sworn affidavit in recordable form stating that:
(A) a default has occurred with respect to the obligation secured by the mortgage; and
(B) the secured party is entitled to enforce the mortgage non judicially.
(c) .Commercially reasonable collection and enforcement..
A secured party shall proceed in a commercially reasonable manner if the secured party:
(1) undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and
(2) is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.
(d) .Expenses of collection and enforcement..
A secured party may deduct from the collections made pursuant to subsection (c) reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party.
(e) .Duties to secured party not affected..
This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.
Critical Words In UCC 9-607
There are several terms in UCC 9-607 that are critical to understand for a complete knowledge of this section. Let’s talk about a few of the most prominent to offer a better analysis of this Uniform Commercial Code section and others that will soon follow.
In the Uniform Commercial Code, a secured party is the person who has the favor of a security interest. This favor comes to life when a security agreement occurs, thus ensuring the secured party has favor to the security if the debtor should happen to default on their loans.
In essence, there might be a tractor offered up as a security interest when a lender offers a debtor money. Once the lender completes a security agreement with the correct parties, they have the first right to the tractor if something goes wrong and thus get to exist in the deal as a secured party.
A security agreement exists between the lender and the person borrowing the money. Typically, a legal security agreement will hold two signatures - one from each member. These signatures will grant items to the lender, like specified goods for a security interest.
Descriptions are usually found in security agreements, too. These recognize the specifics about what is being held up for collateral to avoid dishonesty or confusion in the coming years.
A debtor is one part of an agreeing party under the Uniform Commercial Code. A debtor is an individual who is either a consignee, a seller of accounts, chattel paper, payment intangibles, and more, or they are a person who has an interest that isn’t a security interest.
A debtor is a person who receives money from a lender, and thus they owe repayments. They are the other half of the lender’s deal.
Finally, a deposit account. The Uniform Commercial Code declares that a deposit account is defined as a time, demand, passbook, savings, and anything else with the bank-maintained account.
It’s critical to note that this term doesn’t include any of the lands, properties, and accounts that are indexed by an instrument. It’s another critical piece to the house pizza, and it’s paying off.
Reference Legal Explanations
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"What is UCC 9-607?". Legal Explanations. Accessed on December 2, 2023. https://legal-explanations.com/blog/what-is-ucc-9-607/.
"What is UCC 9-607?". Legal Explanations, https://legal-explanations.com/blog/what-is-ucc-9-607/. Accessed 2 December, 2023
What is UCC 9-607?. Legal Explanations. Retrieved from https://legal-explanations.com/blog/what-is-ucc-9-607/.