2010 New York Code
UCC - Uniform Commercial Code
Article 9 - SECURED TRANSACTIONS
Part 4 - (9-401 - 9-409) RIGHTS OF THIRD PARTIES
9-407 - Restrictions on Creation or Enforcement of Security Interest in Leasehold Interest or in Lessor's Residual Interest

Section 9--407. Restrictions  on  Creation  or  Enforcement  of Security
                    Interest in Leasehold Interest or in Lessor's Residual
                    Interest.
    (a) Term  restricting  assignment  generally  ineffective.  Except  as
  otherwise  provided  in  subsection  (b), a term in a lease agreement is
  ineffective to the extent that it:
         (1) prohibits, restricts, or requires the consent of a  party  to
             the  lease to the assignment or transfer of, or the creation,
             attachment, perfection, or enforcement of a security interest
             in, an interest of a party under the lease contract or in the
             lessor's residual interest in the goods; or
         (2) provides that the assignment or  transfer  or  the  creation,
             attachment,   perfection,  or  enforcement  of  the  security
             interest may  give  rise  to  a  default,  breach,  right  of
             recoupment,    claim,    defense,   termination,   right   of
             termination, or remedy under the lease.
    (b) Effectiveness of certain terms. Except as  otherwise  provided  in
  Section  2-A-303(7),  a term described in subsection (a)(2) is effective
  to the extent that there is:
         (1) a transfer by the lessee of the lessee's right of  possession
             or use of the goods in violation of the term; or
         (2) a delegation of a material performance of either party to the
             lease contract in violation of the term.
    (c) Security   interest   not   material   impairment.  The  creation,
  attachment, perfection, or enforcement of a  security  interest  in  the
  lessor's  interest  under  the  lease  contract or the lessor's residual
  interest in the goods is not a  transfer  that  materially  impairs  the
  lessee's  prospect of obtaining return performance or materially changes
  the duty of or materially increases the burden or risk  imposed  on  the
  lessee within the purview of Section 2-A-303(4) unless, and then only to
  the  extent  that,  enforcement  actually  results  in  a  delegation of
  material performance of the lessor.