§25‑9‑620.  Acceptance of collateral in full or partial satisfactionof obligation; compulsory disposition of collateral.

(a) Conditions toacceptance in satisfaction. – Except as otherwise provided in subsection (g) ofthis section, a secured party may accept collateral in full or partialsatisfaction of the obligation it secures only if:

(1) The debtor consentsto the acceptance under subsection (c) of this section;

(2) The secured partydoes not receive, within the time set forth in subsection (d) of this section,a notification of objection to the proposal authenticated by:

a. A person to whichthe secured party was required to send a proposal under G.S. 25‑9‑621;or

b. Any other person,other than the debtor, holding an interest in the collateral subordinate to thesecurity interest that is the subject of the proposal;

(3) If the collateral isconsumer goods, the collateral is not in the possession of the debtor when thedebtor consents to the acceptance; and

(4) Subsection (e) ofthis section does not require the secured party to dispose of the collateral orthe debtor waives the requirement pursuant to G.S. 25‑9‑624.

(b) Purportedacceptance ineffective. – A purported or apparent acceptance of collateralunder this section is ineffective unless:

(1) The secured partyconsents to the acceptance in an authenticated record or sends a proposal tothe debtor; and

(2) The conditions ofsubsection (a) of this section are met.

(c) Debtor's consent. –For purposes of this section:

(1) A debtor consents toan acceptance of collateral in partial satisfaction of the obligation itsecures only if the debtor agrees to the terms of the acceptance in a recordauthenticated after default; and

(2) A debtor consents toan acceptance of collateral in full satisfaction of the obligation it securesonly if the debtor agrees to the terms of the acceptance in a recordauthenticated after default or the secured party:

a. Sends to the debtorafter default a proposal that is unconditional or subject only to a conditionthat collateral not in the possession of the secured party be preserved ormaintained;

b. In the proposal,proposes to accept collateral in full satisfaction of the obligation itsecures; and

c. Does not receive anotification of objection authenticated by the debtor within 20 days after theproposal is sent.

(d) Effectiveness ofnotification. – To be effective under subdivision (a)(2) of this section, anotification of objection must be received by the secured party:

(1) In the case of aperson to which the proposal was sent pursuant to G.S. 25‑9‑621,within 20 days after notification was sent to that person; and

(2) In other cases:

a. Within 20 days afterthe last notification was sent pursuant to G.S. 25‑9‑621; or

b. If a notificationwas not sent, before the debtor consents to the acceptance under subsection (c)of this section.

(e) Mandatorydisposition of consumer goods. – A secured party that has taken possession ofcollateral shall dispose of the collateral pursuant to G.S. 25‑9‑610within the time specified in subsection (f) of this section if:

(1) Sixty percent (60%)of the cash price has been paid in the case of a purchase‑money securityinterest in consumer goods; or

(2) Sixty percent (60%)of the principal amount of the obligation secured has been paid in the case ofa non‑purchase‑money security interest in consumer goods.

(f) Compliance withmandatory disposition requirement. – To comply with subsection (e) of thissection, the secured party shall dispose of the collateral:

(1) Within 90 days aftertaking possession; or

(2) Within any longerperiod to which the debtor and all secondary obligors have agreed in anagreement to that effect entered into and authenticated after default.

(g) No partialsatisfaction in consumer transaction. – In a consumer transaction, a securedparty may not accept collateral in partial satisfaction of the obligation itsecures. (1965, c. 700, s. 1; 1975, c. 862, s. 7; 2000‑169,s. 1.)