2016 Kentucky Revised Statutes CHAPTER 355 - UNIFORM COMMERCIAL CODE Article 9 - Secured Transactions -- Sales of Accounts, Contract Rights, and Chattel Paper 355.9-608 Application of proceeds of collection or enforcement -- Liability for deficiency and right to surplus.
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355.9-608 Application of proceeds of collection or enforcement -- Liability for
deficiency and right to surplus.
(1)
(2)
If a security interest or agricultural lien secures payment or performance of an
obligation, the following rules apply:
(a) A secured party shall apply or pay over for application the cash proceeds of
collection or enforcement under KRS 355.9-607 in the following order to:
1.
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;
2.
The satisfaction of obligations secured by the security interest or
agricultural lien under which the collection or enforcement is made; and
3.
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.
(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 complies, the secured party need not
comply with the holder's demand under paragraph (a)3. of this subsection.
(c) A secured party need not apply or pay over for application noncash proceeds
of collection and enforcement under KRS 355.9-607 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) A secured party shall account to and pay a debtor for any surplus, and the
obligor is liable for any deficiency.
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.
Effective: July 1, 2001
History: Created 2000 Ky. Acts ch. 408, sec. 126, effective July 1, 2001.
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