State Codes and Statutes

Statutes > California > Com > 10301-10311

COMMERCIAL CODE
SECTION 10301-10311



10301.  Except as otherwise provided in this division, a lease
contract is effective and enforceable according to its terms between
the parties, against purchasers of the goods, and against creditors
of the parties.


10302.  Except as otherwise provided in this division, each
provision of this division applies whether the lessor or a third
party has title to the goods, and whether the lessor, the lessee, or
a third party has possession of the goods, notwithstanding any
statute or rule of law that possession or the absence of possession
is fraudulent.



10303.  (a) As used in the section, "creation of a security interest"
includes the sale of a lease contract that is subject to Division 9
(commencing with Section 9101), Secured Transactions, by reason of
paragraph (3) of subdivision (a) of Section 9109.
   (b) Except as provided in subdivision (c) and Section 9407, a
provision in a lease agreement which (1) prohibits the voluntary or
involuntary transfer, including a transfer by sale, sublease,
creation or enforcement of a security interest, or attachment, levy,
or other judicial process, of an interest of a party under the lease
contract or of the lessor's residual interest in the goods, or (2)
makes such a transfer an event of default, gives rise to the rights
and remedies provided in subdivision (d), but a transfer that is
prohibited or is an event of default under the lease agreement is
otherwise effective.
   (c) A provision in a lease agreement which (1) prohibits a
transfer of a right to damages for default with respect to the whole
lease contract or of a right to payment arising out of the transferor'
s due performance of the transferor's entire obligation, or (2) makes
such a transfer an event of default, is not enforceable, and such a
transfer is not a transfer that materially impairs the prospect of
obtaining return performance by, materially changes the duty of, or
materially increases the burden or risk imposed on, the other party
to the lease contract within the purview of subdivision (d).
   (d) Subject to subdivision (c) and Section 9407:
   (1) If a transfer is made which is made an event of default under
a lease agreement, the party to the lease contract not making the
transfer, unless that party waives the default or otherwise agrees,
has the rights and remedies described in subdivision (b) of Section
10501.
   (2) If paragraph (1) is not applicable and if a transfer is made
that (A) is prohibited under a lease agreement or (B) materially
impairs the prospect of obtaining return performance by, materially
changes the duty of, or materially increases the burden or risk
imposed on, the other party to the lease contract, unless the party
not making the transfer agrees at any time to the transfer in the
lease contract or otherwise, then, except as limited by contract, (C)
the transferor is liable to the party not making the transfer for
damages caused by the transfer to the extent that the damages could
not reasonably be prevented by the party not making the transfer and
(D) a court having jurisdiction may grant other appropriate relief,
including cancellation of the lease contract or an injunction against
the transfer.
   (e) A transfer of "the lease" or of "all my rights under the
lease," or a transfer in similar general terms, is a transfer of
rights and, unless the language or the circumstances, as in a
transfer for security, indicate the contrary, the transfer is a
delegation of duties by the transferor to the transferee. Acceptance
by the transferee constitutes a promise by the transferee to perform
those duties. The promise is enforceable by either the transferor or
the other party to the lease contract.
   (f) Unless otherwise agreed by the lessor and the lessee, a
delegation of performance does not relieve the transferor as against
the other party of any duty to perform or of any liability for
default.
   (g) In a consumer lease, to prohibit the transfer of an interest
of a party under the lease contract or to make a transfer an event of
default, the language must be specific, by a writing, and
conspicuous.



10304.  (a) Subject to Section 10303, a subsequent lessee from a
lessor of goods under an existing lease contract obtains, to the
extent of the leasehold interest transferred, the leasehold interest
in the goods that the lessor had or had power to transfer, and,
except as provided in subdivision (b) of this section and subdivision
(d) of Section 10527, takes subject to the existing lease contract.
A lessor with voidable title has power to transfer a good leasehold
interest to a good faith subsequent lessee for value, but only to the
extent set forth in the preceding sentence. If goods have been
delivered under a transaction of purchase, the lessor has that power
even though:
   (1) The lessor's transferor was deceived as to the identity of the
lessor;
   (2) The delivery was in exchange for a check which is later
dishonored;
   (3) It was agreed that the transaction was to be a "cash sale"; or
   (4) The delivery was procured through fraud punishable as
larcenous under the criminal law.
   (b) A subsequent lessee in the ordinary course of business from a
lessor who is a merchant dealing in goods of that kind to whom the
goods were entrusted by the existing lessee of that lessor before the
interest of the subsequent lessee became enforceable against that
lessor obtains, to the extent of the leasehold interest transferred,
all of that lessor's and the existing lessee's rights to the goods,
and takes free of the existing lease contract.
   (c) A subsequent lessee from the lessor of goods that are subject
to an existing lease contract and are covered by a certificate of
title issued under a statute of this state or of another jurisdiction
takes no greater rights than those provided both by this section and
by the certificate of title statute.



10305.  (a) Subject to the provisions of Section 10303, a buyer or
sublessee from the lessee of goods under an existing lease contract
obtains, to the extent of the interest transferred, the leasehold
interest in the goods that the lessee had or had power to transfer,
and, except as provided in subdivision (b) of this section and
subdivision (d) of Section 10511, takes subject to the existing lease
contract. A lessee with a voidable leasehold interest has power to
transfer a good leasehold interest to a good faith buyer for value or
a good faith sublessee for value, but only to the extent set forth
in the preceding sentence. When goods have been delivered under a
transaction of lease the lessee has that power even though:
   (1) The lessor was deceived as to the identity of the lessee;
   (2) The delivery was in exchange for a check which is later
dishonored; or
   (3) The delivery was procured through fraud punishable as
larcenous under the criminal law.
   (b) A buyer in the ordinary course of business or a sublessee in
the ordinary course of business from a lessee who is a merchant
dealing in goods of that kind to whom the goods were entrusted by the
lessor obtains, to the extent of the interest transferred, all of
the lessor's and lessee's rights to the goods, and takes free of the
existing lease contract.
   (c) A buyer or sublessee from the lessee of goods that are subject
to an existing lease contract and are covered by a certificate of
title issued under a statute of this state or of another jurisdiction
takes no greater rights than those provided both by this section and
by the certificate of title statute.



10306.  If a person in the ordinary course of his or her business
furnishes services or materials with respect to goods subject to a
lease contract, a lien upon those goods in the possession of that
person given by statute or rule of law for those materials or
services takes priority over any interest of the lessor or lessee
under the lease contract or this division unless the lien is created
by statute and the statute provides otherwise or unless the lien is
created by rule of law and the rule of law provides otherwise.



10307.  (a) Except as otherwise provided in Section 10306, a
creditor of a lessee takes subject to the lease contract.
   (b) Except as otherwise provided in subdivision (c) and in
Sections 10306 and 10308, a creditor of a lessor takes subject to the
lease contract unless the creditor holds a lien that attached to the
goods before the lease contract became enforceable.
   (c) Except as otherwise provided in Sections 9317, 9321, and 9323,
a lessee takes a leasehold interest subject to a security interest
held by a creditor of the lessor.



10308.  (a) A creditor of a lessor in possession of goods subject to
a lease contract may treat the lease contract as void if as against
the creditor retention of possession by the lessor is fraudulent or
void under any statute or rule of law, but retention of possession in
good faith and current course of trade by the lessor for a
commercially reasonable time after the lease contract becomes
enforceable is not fraudulent or void.
   (b) Nothing in this division impairs the rights of creditors of a
lessor if the lease contract is made under circumstances which under
any statute or rule of law apart from this division would constitute
the transaction a fraudulent transfer or voidable preference.
   (c) A creditor of a seller may treat a sale or an identification
of goods to a contract for sale as void if as against the creditor
retention of possession by the seller is fraudulent under any statute
or rule of law, but retention of possession of the goods pursuant to
a lease contract entered into by the seller as lessee and the buyer
as lessor in connection with the sale or identification of the goods
is not fraudulent if the buyer bought for value and in good faith.



10309.  (a) In this section:
   (1) Goods are "fixtures" when they become so related to particular
real estate that an interest in them arises under real estate law;
   (2) A "fixture filing" is the filing, in the office where a record
of a mortgage on the real estate would be recorded, of a financing
statement covering goods that are or are to become fixtures and
conforming to the requirements of subdivisions (a) and (b) of Section
9502;
   (3) A lease is a "purchase money lease" unless the lessee has
possession or use of the goods or the right to possession or use of
the goods before the lease agreement is enforceable;
   (4) A mortgage is a "construction mortgage" to the extent it
secures an obligation incurred for the construction of an improvement
on land including the acquisition cost of the land, if the recorded
writing so indicates; and
   (5) "Encumbrance" includes real estate mortgages and other liens
on real estate and all other rights in real estate that are not
ownership interests.
   (b) Under this division a lease may be of goods that are fixtures
or may continue in goods that become fixtures, but no lease exists
under this division of ordinary building materials incorporated into
an improvement on land.
   (c) This division does not prevent creation of a lease of fixtures
pursuant to real estate law.
   (d) The interest of a lessor of fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real estate
if:
   (1) The lease is a purchase money lease, the conflicting interest
of the encumbrancer or owner arises before the goods become fixtures,
a fixture filing covering the fixtures is filed before the goods
become fixtures or within 20 days thereafter, and the lessee has an
interest of record in the real estate or is in possession of the real
estate;
   (2) A fixture filing covering the fixtures is filed before the
interest of the encumbrancer or owner is of record, the lessor's
interest has priority over any conflicting interest of a predecessor
in title of the encumbrancer or owner, and the lessee has an interest
of record in the real estate or is in possession of the real estate;
   (3) The fixtures are readily removable factory or office machines,
readily removable equipment that is not primarily used or leased for
use in the operation of the real estate, or readily removable
replacements of domestic appliances that are goods subject to a
consumer lease;
   (4) The conflicting interest is a lien on the real estate obtained
by legal or equitable proceedings after the lease contract is
enforceable;
   (5) The encumbrancer or owner has consented in writing to the
lease or has disclaimed an interest in the goods as fixtures; or
   (6) The lessee has a right to remove the goods as against the
encumbrancer or owner. If the lessee's right to remove terminates,
the priority of the interest of the lessor continues for a reasonable
time.
   (e) Notwithstanding paragraph (1) of subdivision (d) but otherwise
subject to subdivision (d), the interest of a lessor of fixtures,
including the lessor's residual interest, is subordinate to the
conflicting interest of an encumbrancer of the real estate under a
construction mortgage recorded before the goods become fixtures if
the goods become fixtures before the completion of the construction.
To the extent given to refinance a construction mortgage, the
conflicting interest of an encumbrancer of the real estate under a
mortgage has this priority to the same extent as the encumbrancer of
the real estate under the construction mortgage.
   (f) In cases not within the preceding subdivisions, priority
between the interest of a lessor of fixtures, including the lessor's
residual interest, and the conflicting interest of an encumbrancer or
owner of the real estate who is not the lessee is determined by the
priority rules governing conflicting interests in real estate.
   (g) If the interest of a lessor of fixtures, including the lessor'
s residual interest, has priority over all conflicting interests of
all owners and encumbrancers of the real estate, the lessor or the
lessee may (1) on default, expiration, termination, or cancellation
of the lease agreement but subject to the lease agreement and this
division, or (2) if necessary to enforce other rights and remedies of
the lessor or lessee under this division, remove the goods from the
real estate, free and clear of all conflicting interests of all
owners and encumbrancers of the real estate, but the lessor or lessee
must reimburse any encumbrancer or owner of the real estate who is
not the lessee and who has not otherwise agreed for the cost of
repair of any physical injury, but not for any diminution in value of
the real estate caused by the absence of the goods removed or by any
necessity of replacing them. A person entitled to reimbursement may
refuse permission to remove until the party seeking removal gives
adequate security for the performance of this obligation.



10310.  (a) Goods are "accessions" when they are installed in or
affixed to other goods.
   (b) The interest of a lessor or a lessee under a lease contract
entered into before the goods became accessions is superior to all
interests in the whole except as stated in subdivision (d).
   (c) The interest of a lessor or a lessee under a lease contract
entered into at the time or after the goods became accessions is
superior to all subsequently acquired interests in the whole except
as stated in subdivision (d) but is subordinate to interests in the
whole existing at the time the lease contract was made unless the
holders of such interests in the whole have in writing consented to
the lease or disclaimed an interest in the goods as part of the
whole.
   (d) The interest of a lessor or a lessee under a lease contract
described in subdivision (b) or (c) is subordinate to the interest
of:
   (1) A buyer in the ordinary course of business or a lessee in the
ordinary course of business of any interest in the whole acquired
after the goods became accessions; or
   (2) A creditor with a security interest in the whole perfected
before the lease contract was made to the extent that the creditor
makes subsequent advances without knowledge of the lease contract.
   (e) When under subdivision (b) or subdivisions (c) and (d) a
lessor or a lessee of accessions holds an interest that is superior
to all interests in the whole, the lessor or the lessee may (1) on
default, expiration, termination, or cancellation of the lease
contract by the other party but subject to the provisions of the
lease contract and this division, or (2) if necessary to enforce his
or her other rights and remedies under this division, remove the
goods from the whole, free and clear of all interests in the whole,
but he or she must reimburse any holder of an interest in the whole
who is not the lessee and who has not otherwise agreed for the cost
of repair of any physical injury but not for any diminution in value
of the whole caused by the absence of the goods removed or by any
necessity for replacing them. A person entitled to reimbursement may
refuse permission to remove until the party seeking removal gives
adequate security for the performance of this obligation.



10311.  Nothing in this division prevents subordination by agreement
by any person entitled to priority.


State Codes and Statutes

Statutes > California > Com > 10301-10311

COMMERCIAL CODE
SECTION 10301-10311



10301.  Except as otherwise provided in this division, a lease
contract is effective and enforceable according to its terms between
the parties, against purchasers of the goods, and against creditors
of the parties.


10302.  Except as otherwise provided in this division, each
provision of this division applies whether the lessor or a third
party has title to the goods, and whether the lessor, the lessee, or
a third party has possession of the goods, notwithstanding any
statute or rule of law that possession or the absence of possession
is fraudulent.



10303.  (a) As used in the section, "creation of a security interest"
includes the sale of a lease contract that is subject to Division 9
(commencing with Section 9101), Secured Transactions, by reason of
paragraph (3) of subdivision (a) of Section 9109.
   (b) Except as provided in subdivision (c) and Section 9407, a
provision in a lease agreement which (1) prohibits the voluntary or
involuntary transfer, including a transfer by sale, sublease,
creation or enforcement of a security interest, or attachment, levy,
or other judicial process, of an interest of a party under the lease
contract or of the lessor's residual interest in the goods, or (2)
makes such a transfer an event of default, gives rise to the rights
and remedies provided in subdivision (d), but a transfer that is
prohibited or is an event of default under the lease agreement is
otherwise effective.
   (c) A provision in a lease agreement which (1) prohibits a
transfer of a right to damages for default with respect to the whole
lease contract or of a right to payment arising out of the transferor'
s due performance of the transferor's entire obligation, or (2) makes
such a transfer an event of default, is not enforceable, and such a
transfer is not a transfer that materially impairs the prospect of
obtaining return performance by, materially changes the duty of, or
materially increases the burden or risk imposed on, the other party
to the lease contract within the purview of subdivision (d).
   (d) Subject to subdivision (c) and Section 9407:
   (1) If a transfer is made which is made an event of default under
a lease agreement, the party to the lease contract not making the
transfer, unless that party waives the default or otherwise agrees,
has the rights and remedies described in subdivision (b) of Section
10501.
   (2) If paragraph (1) is not applicable and if a transfer is made
that (A) is prohibited under a lease agreement or (B) materially
impairs the prospect of obtaining return performance by, materially
changes the duty of, or materially increases the burden or risk
imposed on, the other party to the lease contract, unless the party
not making the transfer agrees at any time to the transfer in the
lease contract or otherwise, then, except as limited by contract, (C)
the transferor is liable to the party not making the transfer for
damages caused by the transfer to the extent that the damages could
not reasonably be prevented by the party not making the transfer and
(D) a court having jurisdiction may grant other appropriate relief,
including cancellation of the lease contract or an injunction against
the transfer.
   (e) A transfer of "the lease" or of "all my rights under the
lease," or a transfer in similar general terms, is a transfer of
rights and, unless the language or the circumstances, as in a
transfer for security, indicate the contrary, the transfer is a
delegation of duties by the transferor to the transferee. Acceptance
by the transferee constitutes a promise by the transferee to perform
those duties. The promise is enforceable by either the transferor or
the other party to the lease contract.
   (f) Unless otherwise agreed by the lessor and the lessee, a
delegation of performance does not relieve the transferor as against
the other party of any duty to perform or of any liability for
default.
   (g) In a consumer lease, to prohibit the transfer of an interest
of a party under the lease contract or to make a transfer an event of
default, the language must be specific, by a writing, and
conspicuous.



10304.  (a) Subject to Section 10303, a subsequent lessee from a
lessor of goods under an existing lease contract obtains, to the
extent of the leasehold interest transferred, the leasehold interest
in the goods that the lessor had or had power to transfer, and,
except as provided in subdivision (b) of this section and subdivision
(d) of Section 10527, takes subject to the existing lease contract.
A lessor with voidable title has power to transfer a good leasehold
interest to a good faith subsequent lessee for value, but only to the
extent set forth in the preceding sentence. If goods have been
delivered under a transaction of purchase, the lessor has that power
even though:
   (1) The lessor's transferor was deceived as to the identity of the
lessor;
   (2) The delivery was in exchange for a check which is later
dishonored;
   (3) It was agreed that the transaction was to be a "cash sale"; or
   (4) The delivery was procured through fraud punishable as
larcenous under the criminal law.
   (b) A subsequent lessee in the ordinary course of business from a
lessor who is a merchant dealing in goods of that kind to whom the
goods were entrusted by the existing lessee of that lessor before the
interest of the subsequent lessee became enforceable against that
lessor obtains, to the extent of the leasehold interest transferred,
all of that lessor's and the existing lessee's rights to the goods,
and takes free of the existing lease contract.
   (c) A subsequent lessee from the lessor of goods that are subject
to an existing lease contract and are covered by a certificate of
title issued under a statute of this state or of another jurisdiction
takes no greater rights than those provided both by this section and
by the certificate of title statute.



10305.  (a) Subject to the provisions of Section 10303, a buyer or
sublessee from the lessee of goods under an existing lease contract
obtains, to the extent of the interest transferred, the leasehold
interest in the goods that the lessee had or had power to transfer,
and, except as provided in subdivision (b) of this section and
subdivision (d) of Section 10511, takes subject to the existing lease
contract. A lessee with a voidable leasehold interest has power to
transfer a good leasehold interest to a good faith buyer for value or
a good faith sublessee for value, but only to the extent set forth
in the preceding sentence. When goods have been delivered under a
transaction of lease the lessee has that power even though:
   (1) The lessor was deceived as to the identity of the lessee;
   (2) The delivery was in exchange for a check which is later
dishonored; or
   (3) The delivery was procured through fraud punishable as
larcenous under the criminal law.
   (b) A buyer in the ordinary course of business or a sublessee in
the ordinary course of business from a lessee who is a merchant
dealing in goods of that kind to whom the goods were entrusted by the
lessor obtains, to the extent of the interest transferred, all of
the lessor's and lessee's rights to the goods, and takes free of the
existing lease contract.
   (c) A buyer or sublessee from the lessee of goods that are subject
to an existing lease contract and are covered by a certificate of
title issued under a statute of this state or of another jurisdiction
takes no greater rights than those provided both by this section and
by the certificate of title statute.



10306.  If a person in the ordinary course of his or her business
furnishes services or materials with respect to goods subject to a
lease contract, a lien upon those goods in the possession of that
person given by statute or rule of law for those materials or
services takes priority over any interest of the lessor or lessee
under the lease contract or this division unless the lien is created
by statute and the statute provides otherwise or unless the lien is
created by rule of law and the rule of law provides otherwise.



10307.  (a) Except as otherwise provided in Section 10306, a
creditor of a lessee takes subject to the lease contract.
   (b) Except as otherwise provided in subdivision (c) and in
Sections 10306 and 10308, a creditor of a lessor takes subject to the
lease contract unless the creditor holds a lien that attached to the
goods before the lease contract became enforceable.
   (c) Except as otherwise provided in Sections 9317, 9321, and 9323,
a lessee takes a leasehold interest subject to a security interest
held by a creditor of the lessor.



10308.  (a) A creditor of a lessor in possession of goods subject to
a lease contract may treat the lease contract as void if as against
the creditor retention of possession by the lessor is fraudulent or
void under any statute or rule of law, but retention of possession in
good faith and current course of trade by the lessor for a
commercially reasonable time after the lease contract becomes
enforceable is not fraudulent or void.
   (b) Nothing in this division impairs the rights of creditors of a
lessor if the lease contract is made under circumstances which under
any statute or rule of law apart from this division would constitute
the transaction a fraudulent transfer or voidable preference.
   (c) A creditor of a seller may treat a sale or an identification
of goods to a contract for sale as void if as against the creditor
retention of possession by the seller is fraudulent under any statute
or rule of law, but retention of possession of the goods pursuant to
a lease contract entered into by the seller as lessee and the buyer
as lessor in connection with the sale or identification of the goods
is not fraudulent if the buyer bought for value and in good faith.



10309.  (a) In this section:
   (1) Goods are "fixtures" when they become so related to particular
real estate that an interest in them arises under real estate law;
   (2) A "fixture filing" is the filing, in the office where a record
of a mortgage on the real estate would be recorded, of a financing
statement covering goods that are or are to become fixtures and
conforming to the requirements of subdivisions (a) and (b) of Section
9502;
   (3) A lease is a "purchase money lease" unless the lessee has
possession or use of the goods or the right to possession or use of
the goods before the lease agreement is enforceable;
   (4) A mortgage is a "construction mortgage" to the extent it
secures an obligation incurred for the construction of an improvement
on land including the acquisition cost of the land, if the recorded
writing so indicates; and
   (5) "Encumbrance" includes real estate mortgages and other liens
on real estate and all other rights in real estate that are not
ownership interests.
   (b) Under this division a lease may be of goods that are fixtures
or may continue in goods that become fixtures, but no lease exists
under this division of ordinary building materials incorporated into
an improvement on land.
   (c) This division does not prevent creation of a lease of fixtures
pursuant to real estate law.
   (d) The interest of a lessor of fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real estate
if:
   (1) The lease is a purchase money lease, the conflicting interest
of the encumbrancer or owner arises before the goods become fixtures,
a fixture filing covering the fixtures is filed before the goods
become fixtures or within 20 days thereafter, and the lessee has an
interest of record in the real estate or is in possession of the real
estate;
   (2) A fixture filing covering the fixtures is filed before the
interest of the encumbrancer or owner is of record, the lessor's
interest has priority over any conflicting interest of a predecessor
in title of the encumbrancer or owner, and the lessee has an interest
of record in the real estate or is in possession of the real estate;
   (3) The fixtures are readily removable factory or office machines,
readily removable equipment that is not primarily used or leased for
use in the operation of the real estate, or readily removable
replacements of domestic appliances that are goods subject to a
consumer lease;
   (4) The conflicting interest is a lien on the real estate obtained
by legal or equitable proceedings after the lease contract is
enforceable;
   (5) The encumbrancer or owner has consented in writing to the
lease or has disclaimed an interest in the goods as fixtures; or
   (6) The lessee has a right to remove the goods as against the
encumbrancer or owner. If the lessee's right to remove terminates,
the priority of the interest of the lessor continues for a reasonable
time.
   (e) Notwithstanding paragraph (1) of subdivision (d) but otherwise
subject to subdivision (d), the interest of a lessor of fixtures,
including the lessor's residual interest, is subordinate to the
conflicting interest of an encumbrancer of the real estate under a
construction mortgage recorded before the goods become fixtures if
the goods become fixtures before the completion of the construction.
To the extent given to refinance a construction mortgage, the
conflicting interest of an encumbrancer of the real estate under a
mortgage has this priority to the same extent as the encumbrancer of
the real estate under the construction mortgage.
   (f) In cases not within the preceding subdivisions, priority
between the interest of a lessor of fixtures, including the lessor's
residual interest, and the conflicting interest of an encumbrancer or
owner of the real estate who is not the lessee is determined by the
priority rules governing conflicting interests in real estate.
   (g) If the interest of a lessor of fixtures, including the lessor'
s residual interest, has priority over all conflicting interests of
all owners and encumbrancers of the real estate, the lessor or the
lessee may (1) on default, expiration, termination, or cancellation
of the lease agreement but subject to the lease agreement and this
division, or (2) if necessary to enforce other rights and remedies of
the lessor or lessee under this division, remove the goods from the
real estate, free and clear of all conflicting interests of all
owners and encumbrancers of the real estate, but the lessor or lessee
must reimburse any encumbrancer or owner of the real estate who is
not the lessee and who has not otherwise agreed for the cost of
repair of any physical injury, but not for any diminution in value of
the real estate caused by the absence of the goods removed or by any
necessity of replacing them. A person entitled to reimbursement may
refuse permission to remove until the party seeking removal gives
adequate security for the performance of this obligation.



10310.  (a) Goods are "accessions" when they are installed in or
affixed to other goods.
   (b) The interest of a lessor or a lessee under a lease contract
entered into before the goods became accessions is superior to all
interests in the whole except as stated in subdivision (d).
   (c) The interest of a lessor or a lessee under a lease contract
entered into at the time or after the goods became accessions is
superior to all subsequently acquired interests in the whole except
as stated in subdivision (d) but is subordinate to interests in the
whole existing at the time the lease contract was made unless the
holders of such interests in the whole have in writing consented to
the lease or disclaimed an interest in the goods as part of the
whole.
   (d) The interest of a lessor or a lessee under a lease contract
described in subdivision (b) or (c) is subordinate to the interest
of:
   (1) A buyer in the ordinary course of business or a lessee in the
ordinary course of business of any interest in the whole acquired
after the goods became accessions; or
   (2) A creditor with a security interest in the whole perfected
before the lease contract was made to the extent that the creditor
makes subsequent advances without knowledge of the lease contract.
   (e) When under subdivision (b) or subdivisions (c) and (d) a
lessor or a lessee of accessions holds an interest that is superior
to all interests in the whole, the lessor or the lessee may (1) on
default, expiration, termination, or cancellation of the lease
contract by the other party but subject to the provisions of the
lease contract and this division, or (2) if necessary to enforce his
or her other rights and remedies under this division, remove the
goods from the whole, free and clear of all interests in the whole,
but he or she must reimburse any holder of an interest in the whole
who is not the lessee and who has not otherwise agreed for the cost
of repair of any physical injury but not for any diminution in value
of the whole caused by the absence of the goods removed or by any
necessity for replacing them. A person entitled to reimbursement may
refuse permission to remove until the party seeking removal gives
adequate security for the performance of this obligation.



10311.  Nothing in this division prevents subordination by agreement
by any person entitled to priority.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Com > 10301-10311

COMMERCIAL CODE
SECTION 10301-10311



10301.  Except as otherwise provided in this division, a lease
contract is effective and enforceable according to its terms between
the parties, against purchasers of the goods, and against creditors
of the parties.


10302.  Except as otherwise provided in this division, each
provision of this division applies whether the lessor or a third
party has title to the goods, and whether the lessor, the lessee, or
a third party has possession of the goods, notwithstanding any
statute or rule of law that possession or the absence of possession
is fraudulent.



10303.  (a) As used in the section, "creation of a security interest"
includes the sale of a lease contract that is subject to Division 9
(commencing with Section 9101), Secured Transactions, by reason of
paragraph (3) of subdivision (a) of Section 9109.
   (b) Except as provided in subdivision (c) and Section 9407, a
provision in a lease agreement which (1) prohibits the voluntary or
involuntary transfer, including a transfer by sale, sublease,
creation or enforcement of a security interest, or attachment, levy,
or other judicial process, of an interest of a party under the lease
contract or of the lessor's residual interest in the goods, or (2)
makes such a transfer an event of default, gives rise to the rights
and remedies provided in subdivision (d), but a transfer that is
prohibited or is an event of default under the lease agreement is
otherwise effective.
   (c) A provision in a lease agreement which (1) prohibits a
transfer of a right to damages for default with respect to the whole
lease contract or of a right to payment arising out of the transferor'
s due performance of the transferor's entire obligation, or (2) makes
such a transfer an event of default, is not enforceable, and such a
transfer is not a transfer that materially impairs the prospect of
obtaining return performance by, materially changes the duty of, or
materially increases the burden or risk imposed on, the other party
to the lease contract within the purview of subdivision (d).
   (d) Subject to subdivision (c) and Section 9407:
   (1) If a transfer is made which is made an event of default under
a lease agreement, the party to the lease contract not making the
transfer, unless that party waives the default or otherwise agrees,
has the rights and remedies described in subdivision (b) of Section
10501.
   (2) If paragraph (1) is not applicable and if a transfer is made
that (A) is prohibited under a lease agreement or (B) materially
impairs the prospect of obtaining return performance by, materially
changes the duty of, or materially increases the burden or risk
imposed on, the other party to the lease contract, unless the party
not making the transfer agrees at any time to the transfer in the
lease contract or otherwise, then, except as limited by contract, (C)
the transferor is liable to the party not making the transfer for
damages caused by the transfer to the extent that the damages could
not reasonably be prevented by the party not making the transfer and
(D) a court having jurisdiction may grant other appropriate relief,
including cancellation of the lease contract or an injunction against
the transfer.
   (e) A transfer of "the lease" or of "all my rights under the
lease," or a transfer in similar general terms, is a transfer of
rights and, unless the language or the circumstances, as in a
transfer for security, indicate the contrary, the transfer is a
delegation of duties by the transferor to the transferee. Acceptance
by the transferee constitutes a promise by the transferee to perform
those duties. The promise is enforceable by either the transferor or
the other party to the lease contract.
   (f) Unless otherwise agreed by the lessor and the lessee, a
delegation of performance does not relieve the transferor as against
the other party of any duty to perform or of any liability for
default.
   (g) In a consumer lease, to prohibit the transfer of an interest
of a party under the lease contract or to make a transfer an event of
default, the language must be specific, by a writing, and
conspicuous.



10304.  (a) Subject to Section 10303, a subsequent lessee from a
lessor of goods under an existing lease contract obtains, to the
extent of the leasehold interest transferred, the leasehold interest
in the goods that the lessor had or had power to transfer, and,
except as provided in subdivision (b) of this section and subdivision
(d) of Section 10527, takes subject to the existing lease contract.
A lessor with voidable title has power to transfer a good leasehold
interest to a good faith subsequent lessee for value, but only to the
extent set forth in the preceding sentence. If goods have been
delivered under a transaction of purchase, the lessor has that power
even though:
   (1) The lessor's transferor was deceived as to the identity of the
lessor;
   (2) The delivery was in exchange for a check which is later
dishonored;
   (3) It was agreed that the transaction was to be a "cash sale"; or
   (4) The delivery was procured through fraud punishable as
larcenous under the criminal law.
   (b) A subsequent lessee in the ordinary course of business from a
lessor who is a merchant dealing in goods of that kind to whom the
goods were entrusted by the existing lessee of that lessor before the
interest of the subsequent lessee became enforceable against that
lessor obtains, to the extent of the leasehold interest transferred,
all of that lessor's and the existing lessee's rights to the goods,
and takes free of the existing lease contract.
   (c) A subsequent lessee from the lessor of goods that are subject
to an existing lease contract and are covered by a certificate of
title issued under a statute of this state or of another jurisdiction
takes no greater rights than those provided both by this section and
by the certificate of title statute.



10305.  (a) Subject to the provisions of Section 10303, a buyer or
sublessee from the lessee of goods under an existing lease contract
obtains, to the extent of the interest transferred, the leasehold
interest in the goods that the lessee had or had power to transfer,
and, except as provided in subdivision (b) of this section and
subdivision (d) of Section 10511, takes subject to the existing lease
contract. A lessee with a voidable leasehold interest has power to
transfer a good leasehold interest to a good faith buyer for value or
a good faith sublessee for value, but only to the extent set forth
in the preceding sentence. When goods have been delivered under a
transaction of lease the lessee has that power even though:
   (1) The lessor was deceived as to the identity of the lessee;
   (2) The delivery was in exchange for a check which is later
dishonored; or
   (3) The delivery was procured through fraud punishable as
larcenous under the criminal law.
   (b) A buyer in the ordinary course of business or a sublessee in
the ordinary course of business from a lessee who is a merchant
dealing in goods of that kind to whom the goods were entrusted by the
lessor obtains, to the extent of the interest transferred, all of
the lessor's and lessee's rights to the goods, and takes free of the
existing lease contract.
   (c) A buyer or sublessee from the lessee of goods that are subject
to an existing lease contract and are covered by a certificate of
title issued under a statute of this state or of another jurisdiction
takes no greater rights than those provided both by this section and
by the certificate of title statute.



10306.  If a person in the ordinary course of his or her business
furnishes services or materials with respect to goods subject to a
lease contract, a lien upon those goods in the possession of that
person given by statute or rule of law for those materials or
services takes priority over any interest of the lessor or lessee
under the lease contract or this division unless the lien is created
by statute and the statute provides otherwise or unless the lien is
created by rule of law and the rule of law provides otherwise.



10307.  (a) Except as otherwise provided in Section 10306, a
creditor of a lessee takes subject to the lease contract.
   (b) Except as otherwise provided in subdivision (c) and in
Sections 10306 and 10308, a creditor of a lessor takes subject to the
lease contract unless the creditor holds a lien that attached to the
goods before the lease contract became enforceable.
   (c) Except as otherwise provided in Sections 9317, 9321, and 9323,
a lessee takes a leasehold interest subject to a security interest
held by a creditor of the lessor.



10308.  (a) A creditor of a lessor in possession of goods subject to
a lease contract may treat the lease contract as void if as against
the creditor retention of possession by the lessor is fraudulent or
void under any statute or rule of law, but retention of possession in
good faith and current course of trade by the lessor for a
commercially reasonable time after the lease contract becomes
enforceable is not fraudulent or void.
   (b) Nothing in this division impairs the rights of creditors of a
lessor if the lease contract is made under circumstances which under
any statute or rule of law apart from this division would constitute
the transaction a fraudulent transfer or voidable preference.
   (c) A creditor of a seller may treat a sale or an identification
of goods to a contract for sale as void if as against the creditor
retention of possession by the seller is fraudulent under any statute
or rule of law, but retention of possession of the goods pursuant to
a lease contract entered into by the seller as lessee and the buyer
as lessor in connection with the sale or identification of the goods
is not fraudulent if the buyer bought for value and in good faith.



10309.  (a) In this section:
   (1) Goods are "fixtures" when they become so related to particular
real estate that an interest in them arises under real estate law;
   (2) A "fixture filing" is the filing, in the office where a record
of a mortgage on the real estate would be recorded, of a financing
statement covering goods that are or are to become fixtures and
conforming to the requirements of subdivisions (a) and (b) of Section
9502;
   (3) A lease is a "purchase money lease" unless the lessee has
possession or use of the goods or the right to possession or use of
the goods before the lease agreement is enforceable;
   (4) A mortgage is a "construction mortgage" to the extent it
secures an obligation incurred for the construction of an improvement
on land including the acquisition cost of the land, if the recorded
writing so indicates; and
   (5) "Encumbrance" includes real estate mortgages and other liens
on real estate and all other rights in real estate that are not
ownership interests.
   (b) Under this division a lease may be of goods that are fixtures
or may continue in goods that become fixtures, but no lease exists
under this division of ordinary building materials incorporated into
an improvement on land.
   (c) This division does not prevent creation of a lease of fixtures
pursuant to real estate law.
   (d) The interest of a lessor of fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real estate
if:
   (1) The lease is a purchase money lease, the conflicting interest
of the encumbrancer or owner arises before the goods become fixtures,
a fixture filing covering the fixtures is filed before the goods
become fixtures or within 20 days thereafter, and the lessee has an
interest of record in the real estate or is in possession of the real
estate;
   (2) A fixture filing covering the fixtures is filed before the
interest of the encumbrancer or owner is of record, the lessor's
interest has priority over any conflicting interest of a predecessor
in title of the encumbrancer or owner, and the lessee has an interest
of record in the real estate or is in possession of the real estate;
   (3) The fixtures are readily removable factory or office machines,
readily removable equipment that is not primarily used or leased for
use in the operation of the real estate, or readily removable
replacements of domestic appliances that are goods subject to a
consumer lease;
   (4) The conflicting interest is a lien on the real estate obtained
by legal or equitable proceedings after the lease contract is
enforceable;
   (5) The encumbrancer or owner has consented in writing to the
lease or has disclaimed an interest in the goods as fixtures; or
   (6) The lessee has a right to remove the goods as against the
encumbrancer or owner. If the lessee's right to remove terminates,
the priority of the interest of the lessor continues for a reasonable
time.
   (e) Notwithstanding paragraph (1) of subdivision (d) but otherwise
subject to subdivision (d), the interest of a lessor of fixtures,
including the lessor's residual interest, is subordinate to the
conflicting interest of an encumbrancer of the real estate under a
construction mortgage recorded before the goods become fixtures if
the goods become fixtures before the completion of the construction.
To the extent given to refinance a construction mortgage, the
conflicting interest of an encumbrancer of the real estate under a
mortgage has this priority to the same extent as the encumbrancer of
the real estate under the construction mortgage.
   (f) In cases not within the preceding subdivisions, priority
between the interest of a lessor of fixtures, including the lessor's
residual interest, and the conflicting interest of an encumbrancer or
owner of the real estate who is not the lessee is determined by the
priority rules governing conflicting interests in real estate.
   (g) If the interest of a lessor of fixtures, including the lessor'
s residual interest, has priority over all conflicting interests of
all owners and encumbrancers of the real estate, the lessor or the
lessee may (1) on default, expiration, termination, or cancellation
of the lease agreement but subject to the lease agreement and this
division, or (2) if necessary to enforce other rights and remedies of
the lessor or lessee under this division, remove the goods from the
real estate, free and clear of all conflicting interests of all
owners and encumbrancers of the real estate, but the lessor or lessee
must reimburse any encumbrancer or owner of the real estate who is
not the lessee and who has not otherwise agreed for the cost of
repair of any physical injury, but not for any diminution in value of
the real estate caused by the absence of the goods removed or by any
necessity of replacing them. A person entitled to reimbursement may
refuse permission to remove until the party seeking removal gives
adequate security for the performance of this obligation.



10310.  (a) Goods are "accessions" when they are installed in or
affixed to other goods.
   (b) The interest of a lessor or a lessee under a lease contract
entered into before the goods became accessions is superior to all
interests in the whole except as stated in subdivision (d).
   (c) The interest of a lessor or a lessee under a lease contract
entered into at the time or after the goods became accessions is
superior to all subsequently acquired interests in the whole except
as stated in subdivision (d) but is subordinate to interests in the
whole existing at the time the lease contract was made unless the
holders of such interests in the whole have in writing consented to
the lease or disclaimed an interest in the goods as part of the
whole.
   (d) The interest of a lessor or a lessee under a lease contract
described in subdivision (b) or (c) is subordinate to the interest
of:
   (1) A buyer in the ordinary course of business or a lessee in the
ordinary course of business of any interest in the whole acquired
after the goods became accessions; or
   (2) A creditor with a security interest in the whole perfected
before the lease contract was made to the extent that the creditor
makes subsequent advances without knowledge of the lease contract.
   (e) When under subdivision (b) or subdivisions (c) and (d) a
lessor or a lessee of accessions holds an interest that is superior
to all interests in the whole, the lessor or the lessee may (1) on
default, expiration, termination, or cancellation of the lease
contract by the other party but subject to the provisions of the
lease contract and this division, or (2) if necessary to enforce his
or her other rights and remedies under this division, remove the
goods from the whole, free and clear of all interests in the whole,
but he or she must reimburse any holder of an interest in the whole
who is not the lessee and who has not otherwise agreed for the cost
of repair of any physical injury but not for any diminution in value
of the whole caused by the absence of the goods removed or by any
necessity for replacing them. A person entitled to reimbursement may
refuse permission to remove until the party seeking removal gives
adequate security for the performance of this obligation.



10311.  Nothing in this division prevents subordination by agreement
by any person entitled to priority.