47-9407. Restrictions on creation or
enforcement of security interest in leasehold interest or in
lessor's residual interest
A. Except as otherwise provided in subsection B of this section, 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. Except as otherwise provided in section 47-2A303, subsection G, a term described
in subsection A, paragraph 2 of this section 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. 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 47-2A303, subsection D unless, and
then only to the extent that, enforcement actually results in a delegation of material
performance of the lessor. Even in that event, the creation, attachment, perfection and
enforcement of the security interest remain effective.
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