2006 New York Code - Application Of Proceeds Of Collection Or Enforcement; Liability For Deficiency And Right To Surplus

 
  Section 9--608. Application  of  Proceeds  of Collection or Enforcement;
                    Liability for Deficiency and Right to Surplus.
    (a) Application of proceeds, surplus,  and  deficiency  if  obligation
  secured.  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
             9--607 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; and
             (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 paragraph (1)(C).
         (3) A secured party need not apply or pay  over  for  application
             noncash  proceeds of collection and enforcement under Section
             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.
         (4) A  secured  party  shall  account to and pay a debtor for any
             surplus, and the obligor is liable for any deficiency.
    (b) No surplus or deficiency in sales of certain rights to payment. 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.