16a-3-404.   (UCCC) Assignee subject to defenses; application of paymentsreceived by assignee; limitation of actions; assignee may require selleror lessor to repurchase obligation; joinder of parties; procedure.(1) An assignee of the rights of the seller or lessor under a consumercredit sale or consumer lease is subject to all claims and defenses of the buyeror lessee against the seller or lessor arising out of the sale or lease,notwithstanding that:

      (a)   There is an agreement to the contrary, or

      (b)   the assignee is a holder in due course of a negotiableinstrument issued in violation of the provisions prohibiting certainnegotiable instruments (section 16a-3-307).

      (2)   Claims or defenses of a buyer or lessee specified in subsection(1) may be asserted against the assignee only:

      (a)   If the buyer or lessee has attempted in good faith to obtainreasonable satisfaction from the seller or lessor with respect to claimsor defenses,

      (b)   if the buyer or lessee, when requested in writing to do so bythe seller, lessor or the assignee, has given notice in writing to theseller or lessee and the assignee stating the claims or defenses,

      (c)   to the extent of the amount owing to the assignee with respectto the sale or lease at the time the assignee has notice of such claimsor defenses. Such notice, generally stating the claims or defenses,must be in writing and shall be sent to the seller (or lessor), and tothe assignee if the buyer or lessee has received written notice of thename and address of the assignee, and

      (d)   as a matter of defense to or setoff against claims by theassignee except that the buyer or lessee shall not be prohibited frombringing an action to rescind an obligation against which it has adefense or setoff.

      (3)   For the purpose of determining the amount owing to the assigneewith respect to the sale or lease:

      (a)   Payments received by the assignee after the consolidation of twoor more consumer credit sales, other than pursuant to open end credit,are deemed to have been first applied to the payment of the sales firstmade; if the sales consolidated arose from sales made on the same day,payments are deemed to have been first applied to the smaller orsmallest sale or sales;

      (b)   payments received upon an open end credit account are deemed tohave been first applied to the payment of finance charges in the orderof their entry to the account and then to the payment of debts in theorder in which the entries of the debts are made to the account.

      (4)   Any action by an assignee or the original seller or lessor whohas repurchased an obligation under subsection (5) to enforce anobligation, or any action by a buyer or lessee to rescind, or anyrequest to repurchase the obligation, shall be brought within one yearfrom the date of receipt of the notice of the claim or defense, ordefault in payment, whichever is later.

      (5)   If a claim or defense of a buyer or lessee against a seller orlessor is asserted against an assignee, the assignee may, regardless ofany existing agreement to the contrary, require the seller or lessor torepurchase the obligation for an amount equal to the price for which theobligation was assigned, plus that portion of the finance charge earnedby the assignee, minus payments previously made to the assignee by thebuyer or lessee. In any action by the buyer or lessee to rescind anobligation held by the assignee, the seller or lessor shall have theright to intervene and any party may join as a defendant anymanufacturer or other person who is or may be liable to another party.If the action to rescind is brought against the seller or lessor, suchseller or lessor shall have the right to join as a defendant anymanufacturer or other person who is or may be liable to such seller orlessor.

      (6)   An agreement may not provide greater rights for an assignee thanthis section permits.

      History:   L. 1973, ch. 85, § 59; L. 1975, ch. 127, § 1; L.1976, ch. 145, § 40; L. 1981, ch. 93, § 13; July 1.