554.9620 Acceptance of collateral in full or partial satisfaction of obligation — compulsory disposition of collateral.
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/ia/chapter-554-uniform-commercial-code/554-9620A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
1. Conditions to acceptance in satisfaction. Except as otherwise provided in subsection 7, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:
a. the debtor consents to the acceptance under subsection 3;
b. the secured party does not receive, within the time set forth in subsection 4, a notification of objection to the proposal signed by:
(1)a person to which the secured party was required to send a proposal under section 554.9621; or
(2)any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;
c. if the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and
d. subsection 5 does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 554.9624.
2. Purported acceptance ineffective. A purported or apparent acceptance of collateral under this section is ineffective unless:
a. the secured party consents to the acceptance in a signed record or sends a proposal to the debtor; and
b. the conditions of subsection 1 are met.
3. Debtor’s consent. For purposes of this section:
a. a debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default; and
b. a debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default or the secured party:
(1)sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;
(2)in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and
(3)does not receive a notification of objection signed by the debtor within twenty days after the proposal is sent.
4. Effectiveness of notification. To be effective under subsection 1, paragraph “b”, a notification of objection must be received by the secured party:
a. in the case of a person to which the proposal was sent pursuant to section 554.9621, within twenty days after notification was sent to that person; and
b. in other cases:
(1)within twenty days after the last notification was sent pursuant to section 554.9621; or
(2)if a notification was not sent, before the debtor consents to the acceptance under subsection 3.
5. Mandatory disposition of consumer goods. A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 554.9610 within the time specified in subsection 6 if:
a. sixty percent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or
b. sixty percent of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.
6. Compliance with mandatory disposition requirement. To comply with subsection 5, the secured party shall dispose of the collateral:
a. within ninety days after taking possession; or
b. within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and signed after default.
§554.9620, UNIFORM COMMERCIAL CODE 2
7. No partial satisfaction in consumer transaction. In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.
2000 Acts, ch 1149, §118, 187; 2024 Acts, ch 1023, §99 – 102
Referred to in §554.9102, 554.9406, 554.9408, 554.9602, 554.9624