§ 8.9A-207. Rights and duties of secured party having possession or controlof collateral.
(a) Duty of care when secured party in possession. Except as otherwiseprovided in subsection (d), a secured party shall use reasonable care in thecustody and preservation of collateral in the secured party's possession. Inthe case of chattel paper or an instrument, reasonable care includes takingnecessary steps to preserve rights against prior parties unless otherwiseagreed.
(b) Expenses, risks, duties, and rights when secured party in possession.Except as otherwise provided in subsection (d), if a secured party haspossession of collateral:
(1) reasonable expenses, including the cost of insurance and payment of taxesor other charges, incurred in the custody, preservation, use, or operation ofthe collateral are chargeable to the debtor and are secured by the collateral;
(2) the risk of accidental loss or damage is on the debtor to the extent of adeficiency in any effective insurance coverage;
(3) the secured party shall keep the collateral identifiable, but fungiblecollateral may be commingled; and
(4) the secured party may use or operate the collateral:
(A) for the purpose of preserving the collateral or its value;
(B) as permitted by an order of a court having competent jurisdiction; or
(C) except in the case of consumer goods, in the manner and to the extentagreed by the debtor.
(c) Duties and rights when secured party in possession or control. Except asotherwise provided in subsection (d), a secured party having possession ofcollateral or control of collateral under §§ 8.7-106, 8.9A-104, 8.9A-105,8.9A-106, or § 8.9A-107:
(1) may hold as additional security any proceeds, except money or funds,received from the collateral;
(2) shall apply money or funds received from the collateral to reduce thesecured obligation, unless remitted to the debtor; and
(3) may create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured party is a buyer ofaccounts, chattel paper, payment intangibles, or promissory notes or aconsignor:
(1) subsection (a) does not apply unless the secured party is entitled underan agreement:
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against the debtor or a secondaryobligor based on the nonpayment or other default of an account debtor orother obligor on the collateral; and
(2) subsections (b) and (c) do not apply.
(1964, c. 219, § 8.9-207; 2000, c. 1007; 2004, c. 200.)
§ 8.9A-207. Rights and duties of secured party having possession or controlof collateral.
(a) Duty of care when secured party in possession. Except as otherwiseprovided in subsection (d), a secured party shall use reasonable care in thecustody and preservation of collateral in the secured party's possession. Inthe case of chattel paper or an instrument, reasonable care includes takingnecessary steps to preserve rights against prior parties unless otherwiseagreed.
(b) Expenses, risks, duties, and rights when secured party in possession.Except as otherwise provided in subsection (d), if a secured party haspossession of collateral:
(1) reasonable expenses, including the cost of insurance and payment of taxesor other charges, incurred in the custody, preservation, use, or operation ofthe collateral are chargeable to the debtor and are secured by the collateral;
(2) the risk of accidental loss or damage is on the debtor to the extent of adeficiency in any effective insurance coverage;
(3) the secured party shall keep the collateral identifiable, but fungiblecollateral may be commingled; and
(4) the secured party may use or operate the collateral:
(A) for the purpose of preserving the collateral or its value;
(B) as permitted by an order of a court having competent jurisdiction; or
(C) except in the case of consumer goods, in the manner and to the extentagreed by the debtor.
(c) Duties and rights when secured party in possession or control. Except asotherwise provided in subsection (d), a secured party having possession ofcollateral or control of collateral under §§ 8.7-106, 8.9A-104, 8.9A-105,8.9A-106, or § 8.9A-107:
(1) may hold as additional security any proceeds, except money or funds,received from the collateral;
(2) shall apply money or funds received from the collateral to reduce thesecured obligation, unless remitted to the debtor; and
(3) may create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured party is a buyer ofaccounts, chattel paper, payment intangibles, or promissory notes or aconsignor:
(1) subsection (a) does not apply unless the secured party is entitled underan agreement:
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against the debtor or a secondaryobligor based on the nonpayment or other default of an account debtor orother obligor on the collateral; and
(2) subsections (b) and (c) do not apply.
(1964, c. 219, § 8.9-207; 2000, c. 1007; 2004, c. 200.)
§ 8.9A-207. Rights and duties of secured party having possession or controlof collateral.
(a) Duty of care when secured party in possession. Except as otherwiseprovided in subsection (d), a secured party shall use reasonable care in thecustody and preservation of collateral in the secured party's possession. Inthe case of chattel paper or an instrument, reasonable care includes takingnecessary steps to preserve rights against prior parties unless otherwiseagreed.
(b) Expenses, risks, duties, and rights when secured party in possession.Except as otherwise provided in subsection (d), if a secured party haspossession of collateral:
(1) reasonable expenses, including the cost of insurance and payment of taxesor other charges, incurred in the custody, preservation, use, or operation ofthe collateral are chargeable to the debtor and are secured by the collateral;
(2) the risk of accidental loss or damage is on the debtor to the extent of adeficiency in any effective insurance coverage;
(3) the secured party shall keep the collateral identifiable, but fungiblecollateral may be commingled; and
(4) the secured party may use or operate the collateral:
(A) for the purpose of preserving the collateral or its value;
(B) as permitted by an order of a court having competent jurisdiction; or
(C) except in the case of consumer goods, in the manner and to the extentagreed by the debtor.
(c) Duties and rights when secured party in possession or control. Except asotherwise provided in subsection (d), a secured party having possession ofcollateral or control of collateral under §§ 8.7-106, 8.9A-104, 8.9A-105,8.9A-106, or § 8.9A-107:
(1) may hold as additional security any proceeds, except money or funds,received from the collateral;
(2) shall apply money or funds received from the collateral to reduce thesecured obligation, unless remitted to the debtor; and
(3) may create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured party is a buyer ofaccounts, chattel paper, payment intangibles, or promissory notes or aconsignor:
(1) subsection (a) does not apply unless the secured party is entitled underan agreement:
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against the debtor or a secondaryobligor based on the nonpayment or other default of an account debtor orother obligor on the collateral; and
(2) subsections (b) and (c) do not apply.
(1964, c. 219, § 8.9-207; 2000, c. 1007; 2004, c. 200.)
