§ 25-9-628. Nonliability and limitation on liability of secured party; liability of secondary obligor.

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(a)Limitation of Liability of Secured Party for Noncompliance with Article. - Subject to subsection

(f)of this section, unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person, both of the following apply:

(1)The secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this Article.

(2)The secured party's failure to comply with this Article does not affect the liability of the person for a deficiency.

(b)Limitation of Liability Based on Status as Secured Party. - Subject to subsection

(f)of this section, a secured party is not liable because of its status as secured party to either of the following:

(1)To a person that is a debtor or obligor, unless the secured party knows all of the following:

a. That the person is a debtor or obligor.

b. The identity of the person.

c. How to communicate with the person.

(2)To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows both of the following:

a. That the person is a debtor.

b. The identity of the person.

(c)Limitation of Liability If Reasonable Belief That Transaction Not a Consumer-Goods Transaction or Consumer Transaction. - A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on either of the following:

(1)A debtor's representation concerning the purpose for which collateral was to be used, acquired, or held.

(2)An obligor's representation concerning the purpose for which a secured obligation was incurred.

(d)Limitation of Liability for Statutory Damages. - A secured party is not liable to any person under G.S. 25-9-625(c)(2) for its failure to comply with G.S. 25-9-616.

(e)Limitation of Multiple Liability for Statutory Damages. - A secured party is not liable under G.S. 25-9-625(c)(2) more than once with respect to any one secured obligation.

(f)Exception to Limitation of Liability Under Subsections

(a)and (b). - Subsections

(a)and

(b)of this section do not apply to limit the liability of a secured party to a person if, at the time the secured party obtains control of collateral that is a controllable account, controllable electronic record, or controllable payment intangible or at the time the security interest attaches to the collateral, whichever is later, both of the following apply:

(1)The person is a debtor or obligor.

(2)The secured party knows that the information in sub-subdivision (b)(1)a., b., or c. of this section relating to the person is not provided by the collateral, a record attached to or logically associated with the collateral, or the system in which the collateral is recorded. (2000-169, s. 1; 2025-25, s. 107.)