§25‑9‑615. Application of proceeds of disposition; liability fordeficiency and right to surplus.
(a) Application ofproceeds. A secured party shall apply or pay over for application the cashproceeds of disposition under G.S. 25‑9‑610 in the following orderto:
(1) The reasonableexpenses of retaking, holding, preparing for disposition, processing, anddisposing, and, to the extent provided for by agreement and not prohibited bylaw, reasonable attorney's fees and legal expenses incurred by the securedparty;
(2) The satisfaction ofobligations secured by the security interest or agricultural lien under whichthe disposition is made;
(3) The satisfaction ofobligations secured by any subordinate security interest in or othersubordinate lien on the collateral if:
a. The secured partyreceives from the holder of the subordinate security interest or other lien anauthenticated demand for proceeds before distribution of the proceeds iscompleted; and
b. In a case in which aconsignor has an interest in the collateral, the subordinate security interestor other lien is senior to the interest of the consignor; and
(4) A secured party thatis a consignor of the collateral if the secured party receives from theconsignor an authenticated demand for proceeds before distribution of theproceeds is completed.
(b) Proof ofsubordinate interest. If requested by a secured party, a holder of asubordinate security interest or other lien shall furnish reasonable proof ofthe interest or lien within a reasonable time. Unless the holder does so, thesecured party need not comply with the holder's demand under subdivision (a)(3)of this section.
(c) Application ofnoncash proceeds. A secured party need not apply or pay over for applicationnoncash proceeds of disposition under G.S. 25‑9‑610 unless thefailure to do so would be commercially unreasonable. A secured party thatapplies or pays over for application noncash proceeds shall do so in acommercially reasonable manner.
(d) Surplus ordeficiency if obligation secured. If the security interest under which adisposition is made secures payment or performance of an obligation, aftermaking the payments and applications required by subsection (a) of this sectionand permitted by subsection (c) of this section:
(1) Unless subdivision(a)(4) of this section requires the secured party to apply or pay over cashproceeds to a consignor, the secured party shall account to and pay a debtorfor any surplus; and
(2) The obligor isliable for any deficiency.
(e) No surplus or deficiencyin sales of certain rights to payment. If the underlying transaction is asale of accounts, chattel paper, payment intangibles, or promissory notes:
(1) The debtor is notentitled to any surplus; and
(2) The obligor is notliable for any deficiency.
(f) Calculation ofsurplus or deficiency in disposition to person related to secured party. Thesurplus or deficiency following a disposition is calculated based on the amountof proceeds that would have been realized in a disposition complying with thisPart to a transferee other than the secured party, a person related to thesecured party, or a secondary obligor if:
(1) The transferee inthe disposition is the secured party, a person related to the secured party, ora secondary obligor; and
(2) The amount ofproceeds of the disposition is significantly below the range of proceeds that acomplying disposition to a person other than the secured party, a personrelated to the secured party, or a secondary obligor would have brought.
(g) Cash proceeds receivedby junior secured party. A secured party that receives cash proceeds of adisposition in good faith and without knowledge that the receipt violates therights of the holder of a security interest or other lien that is notsubordinate to the security interest or agricultural lien under which thedisposition is made:
(1) Takes the cashproceeds free of the security interest or other lien;
(2) Is not obligated toapply the proceeds of the disposition to the satisfaction of obligationssecured by the security interest or other lien; and
(3) Is not obligated toaccount to or pay the holder of the security interest or other lien for anysurplus. (1965, c. 700, s. 1; 1975, c. 862, s. 7; 2000‑169,s. 1.)
§25‑9‑615. Application of proceeds of disposition; liability fordeficiency and right to surplus.
(a) Application ofproceeds. A secured party shall apply or pay over for application the cashproceeds of disposition under G.S. 25‑9‑610 in the following orderto:
(1) The reasonableexpenses of retaking, holding, preparing for disposition, processing, anddisposing, and, to the extent provided for by agreement and not prohibited bylaw, reasonable attorney's fees and legal expenses incurred by the securedparty;
(2) The satisfaction ofobligations secured by the security interest or agricultural lien under whichthe disposition is made;
(3) The satisfaction ofobligations secured by any subordinate security interest in or othersubordinate lien on the collateral if:
a. The secured partyreceives from the holder of the subordinate security interest or other lien anauthenticated demand for proceeds before distribution of the proceeds iscompleted; and
b. In a case in which aconsignor has an interest in the collateral, the subordinate security interestor other lien is senior to the interest of the consignor; and
(4) A secured party thatis a consignor of the collateral if the secured party receives from theconsignor an authenticated demand for proceeds before distribution of theproceeds is completed.
(b) Proof ofsubordinate interest. If requested by a secured party, a holder of asubordinate security interest or other lien shall furnish reasonable proof ofthe interest or lien within a reasonable time. Unless the holder does so, thesecured party need not comply with the holder's demand under subdivision (a)(3)of this section.
(c) Application ofnoncash proceeds. A secured party need not apply or pay over for applicationnoncash proceeds of disposition under G.S. 25‑9‑610 unless thefailure to do so would be commercially unreasonable. A secured party thatapplies or pays over for application noncash proceeds shall do so in acommercially reasonable manner.
(d) Surplus ordeficiency if obligation secured. If the security interest under which adisposition is made secures payment or performance of an obligation, aftermaking the payments and applications required by subsection (a) of this sectionand permitted by subsection (c) of this section:
(1) Unless subdivision(a)(4) of this section requires the secured party to apply or pay over cashproceeds to a consignor, the secured party shall account to and pay a debtorfor any surplus; and
(2) The obligor isliable for any deficiency.
(e) No surplus or deficiencyin sales of certain rights to payment. If the underlying transaction is asale of accounts, chattel paper, payment intangibles, or promissory notes:
(1) The debtor is notentitled to any surplus; and
(2) The obligor is notliable for any deficiency.
(f) Calculation ofsurplus or deficiency in disposition to person related to secured party. Thesurplus or deficiency following a disposition is calculated based on the amountof proceeds that would have been realized in a disposition complying with thisPart to a transferee other than the secured party, a person related to thesecured party, or a secondary obligor if:
(1) The transferee inthe disposition is the secured party, a person related to the secured party, ora secondary obligor; and
(2) The amount ofproceeds of the disposition is significantly below the range of proceeds that acomplying disposition to a person other than the secured party, a personrelated to the secured party, or a secondary obligor would have brought.
(g) Cash proceeds receivedby junior secured party. A secured party that receives cash proceeds of adisposition in good faith and without knowledge that the receipt violates therights of the holder of a security interest or other lien that is notsubordinate to the security interest or agricultural lien under which thedisposition is made:
(1) Takes the cashproceeds free of the security interest or other lien;
(2) Is not obligated toapply the proceeds of the disposition to the satisfaction of obligationssecured by the security interest or other lien; and
(3) Is not obligated toaccount to or pay the holder of the security interest or other lien for anysurplus. (1965, c. 700, s. 1; 1975, c. 862, s. 7; 2000‑169,s. 1.)
§25‑9‑615. Application of proceeds of disposition; liability fordeficiency and right to surplus.
(a) Application ofproceeds. A secured party shall apply or pay over for application the cashproceeds of disposition under G.S. 25‑9‑610 in the following orderto:
(1) The reasonableexpenses of retaking, holding, preparing for disposition, processing, anddisposing, and, to the extent provided for by agreement and not prohibited bylaw, reasonable attorney's fees and legal expenses incurred by the securedparty;
(2) The satisfaction ofobligations secured by the security interest or agricultural lien under whichthe disposition is made;
(3) The satisfaction ofobligations secured by any subordinate security interest in or othersubordinate lien on the collateral if:
a. The secured partyreceives from the holder of the subordinate security interest or other lien anauthenticated demand for proceeds before distribution of the proceeds iscompleted; and
b. In a case in which aconsignor has an interest in the collateral, the subordinate security interestor other lien is senior to the interest of the consignor; and
(4) A secured party thatis a consignor of the collateral if the secured party receives from theconsignor an authenticated demand for proceeds before distribution of theproceeds is completed.
(b) Proof ofsubordinate interest. If requested by a secured party, a holder of asubordinate security interest or other lien shall furnish reasonable proof ofthe interest or lien within a reasonable time. Unless the holder does so, thesecured party need not comply with the holder's demand under subdivision (a)(3)of this section.
(c) Application ofnoncash proceeds. A secured party need not apply or pay over for applicationnoncash proceeds of disposition under G.S. 25‑9‑610 unless thefailure to do so would be commercially unreasonable. A secured party thatapplies or pays over for application noncash proceeds shall do so in acommercially reasonable manner.
(d) Surplus ordeficiency if obligation secured. If the security interest under which adisposition is made secures payment or performance of an obligation, aftermaking the payments and applications required by subsection (a) of this sectionand permitted by subsection (c) of this section:
(1) Unless subdivision(a)(4) of this section requires the secured party to apply or pay over cashproceeds to a consignor, the secured party shall account to and pay a debtorfor any surplus; and
(2) The obligor isliable for any deficiency.
(e) No surplus or deficiencyin sales of certain rights to payment. If the underlying transaction is asale of accounts, chattel paper, payment intangibles, or promissory notes:
(1) The debtor is notentitled to any surplus; and
(2) The obligor is notliable for any deficiency.
(f) Calculation ofsurplus or deficiency in disposition to person related to secured party. Thesurplus or deficiency following a disposition is calculated based on the amountof proceeds that would have been realized in a disposition complying with thisPart to a transferee other than the secured party, a person related to thesecured party, or a secondary obligor if:
(1) The transferee inthe disposition is the secured party, a person related to the secured party, ora secondary obligor; and
(2) The amount ofproceeds of the disposition is significantly below the range of proceeds that acomplying disposition to a person other than the secured party, a personrelated to the secured party, or a secondary obligor would have brought.
(g) Cash proceeds receivedby junior secured party. A secured party that receives cash proceeds of adisposition in good faith and without knowledge that the receipt violates therights of the holder of a security interest or other lien that is notsubordinate to the security interest or agricultural lien under which thedisposition is made:
(1) Takes the cashproceeds free of the security interest or other lien;
(2) Is not obligated toapply the proceeds of the disposition to the satisfaction of obligationssecured by the security interest or other lien; and
(3) Is not obligated toaccount to or pay the holder of the security interest or other lien for anysurplus. (1965, c. 700, s. 1; 1975, c. 862, s. 7; 2000‑169,s. 1.)
