2019 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 9 - Secured Transactions
Part 6 - DEFAULT
Subpart 1 - DEFAULT AND ENFORCEMENT OFSECURITY INTEREST
Section 55-9-604 - Procedure if security agreement covers real property or fixtures.

(a) If a security agreement covers both personal and real property, a secured party may proceed:

(1) under Sections 55-9-601 through 55-9-628 NMSA 1978 as to the personal property without prejudicing any rights with respect to the real property; or

(2) as to both the personal property and the real property in accordance with the rights with respect to the real property, in which case the other provisions of Sections 55-9-601 through 55-9-628 NMSA 1978 do not apply.

(b) Subject to Subsection (c) of this section, if a security agreement covers goods that are or become fixtures, a secured party may proceed:

(1) under Sections 55-9-601 through 55-9-628 NMSA 1978; or

(2) in accordance with the rights with respect to real property, in which case the other provisions of Sections 55-9-601 through 55-9-628 NMSA 1978 do not apply.

(c) Subject to the other provisions of Sections 55-9-601 through 55-9-628 NMSA 1978, if a secured party holding a security interest in fixtures has priority over all owners and encumbrancers of the real property, the secured party, after default, may remove the collateral from the real property.

(d) A secured party that removes collateral shall promptly reimburse any encumbrancer or owner of the real property, other than the debtor, for the cost of repair of any physical injury caused by the removal. The secured party need not reimburse the encumbrancer or owner for any diminution in value of the real property caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

History: 1978 Comp., § 55-9-604, enacted by Laws 2001, ch. 139, § 101.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

1. Source. Former sections 9-313(8) and 9-501(4).

2. Real-Property-Related Collateral. The collateral in many transactions consists of both real and personal property. In the interest of simplicity, speed, and economy, subsection (a), like former section 9-501(4), permits (but does not require) the secured party to proceed as to both real and personal property in accordance with its rights and remedies with respect to the real property. Subsection (a) also makes clear that a secured party who exercises rights under part 6 with respect to personal property does not prejudice any rights under real-property law.

This article does not address certain other real-property-related problems. In a number of states, the exercise of remedies by a creditor who is secured by both real property and non-real property collateral is governed by special legal rules. For example, under some antideficiency laws, creditors risk loss of rights against personal property collateral if they err in enforcing their rights against the real property. Under a "one-form-of-action" rule (or rule against splitting a cause of action), a creditor who judicially enforces a real property mortgage and does not proceed in the same action to enforce a security interest in personalty may (among other consequences) lose the right to proceed against the personalty. Although statutes of this kind create impediments to enforcement of security interests, this article does not override these limitations under other law.

3. Fixtures. Subsection (b) is new. It makes clear that a security interest in fixtures may be enforced either under real property law or under any of the applicable provisions of part 6, including sale or other disposition either before or after removal of the fixtures (see subsection (c)). Subsection (b) also serves to overrule cases holding that a secured party's only remedy after default is the removal of the fixtures from the real property. See, e.g., Maplewood Bank & Trust v. Sears, Roebuck & Co., 625 A.2d 537 (N.J. Super. Ct. App. Div. 1993).

Subsection (c) generally follows former section 9-313(8). It gives the secured party the right to remove fixtures under certain circumstances. A secured party whose security interest in fixtures has priority over owners and encumbrancers of the real property may remove the collateral from the real property. However, subsection (d) requires the secured party to reimburse any owner (other than the debtor) or encumbrancer for the cost of repairing any physical injury caused by the removal. This right to reimbursement is implemented by the last sentence of subsection (d), which gives the owner or encumbrancer a right to security or indemnity as a condition for giving permission to remove.

Effective dates. — Laws 2001, ch. 139, § 155 makes the act effective July 1, 2001.

Decisions under former Sections 55-9-313 and 55-9-501 NMSA 1978. — In light of the similarity of this section and former Sections 55-9-313 and 55-9-501 NMSA 1978, annotations decided under former Sections 55-9-313 and 55-9-501 NMSA 1978 have been included in the annotations in this section.

When secured party may remove fixtures. — Where defendant's purchase money security interests in pumping equipment installed by tenant on property leased by plaintiff attached before the equipment became fixtures on the property, such interest was given priority over plaintiff's antecedent interest in the property, and defendant was therefore justified in removing equipment from land when tenant was evicted from property by plaintiff for failure to pay rent. Honea v. Laco Auto Leasing, Inc., 1969-NMCA-025, 80 N.M. 300, 454 P.2d 782 (decided under former law).

Law reviews. — For note, "Fixtures, Security Interests and Filing: Problems of Title Examination in New Mexico," see 8 Nat. Resources J. 513 (1968).

For comment, "New Mexico's Uniform Commercial Code in Oil and Gas Transactions," see 10 Nat. Resources J. 361 (1970).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 68A Am. Jur. 2d Secured Transactions § 581.

79 C.J.S. Secured Transactions § 153 et seq.