Okla. Stat. tit. 12A § 1-9-620

Current through Laws 2024, c. 453.

Section 1-9-620 - [Effective Until 11/1/2024] Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral

(a) Except as otherwise provided in subsection (g) of this section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

(1) the debtor consents to the acceptance under subsection (c) of this section;

(2) the secured party does 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 which the secured party was required to send a proposal under Section 1-9-621 of this title; or

(B) any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;

(3) if the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and

(4) subsection (e) of this section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to Section 1-9-624 of this title.

(b) A purported or apparent acceptance of collateral under this section is ineffective unless:

(1) the secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and

(2) the conditions of subsection (a) of this section are met.

(c) For purposes of this section:

(1) a debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and

(2) a debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:

(A) sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;

(B) in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

(C) does not receive a notification of objection authenticated by the debtor within twenty (20) days after the proposal is sent.

(d) To be effective under paragraph (2) of subsection (a) of this section, a notification of objection must be received by the secured party:

(1) in the case of a person to which the proposal was sent pursuant to Section 1-9-621 of this title, within twenty (20) days after notification was sent to that person; and

(2) in other cases:

(A) within twenty (20) days after the last notification was sent pursuant to Section 1-9-621 of this title; or

(B) if a notification was not sent, before the debtor consents to the acceptance under subsection (c) of this section.

(e) A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Section 1-9-610 of this title within 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 security interest in consumer goods; or

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

(f) To comply with subsection (e) of this section, the secured party shall dispose of the collateral:

(1) within ninety (90) days after taking possession; or

(2) within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

(g) In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

Okla. Stat. tit. 12A, § 1-9-620

Added by Laws 2000 , SB 1519, c. 371, § 127, eff. 7/1/2001.

Oklahoma Code Comment

Sections 9-620, 9-621, and 9-622 expand and substantially revise former section 9-505 . Significant changes codified in section 9-620 include:

A definition for the term "proposal" has been added; the definition is codified in section 9-102(a)(66) :

Section 9-620 adds terms explicitly providing for acceptance of the collateral in partial satisfaction of the obligation, ( section 9-620(a)), but for a partial satisfaction to be valid, the debtor must agree in a record authenticated after default, ( section 9-620(c)(1)). In the case of real property, it appears that a transfer of mortgaged real property to the mortgagee may have to be in full satisfaction of the secured obligation see Morrow Development Corporation v. American Bank and Trust, 875 p.2d 411 (Okla.1994); Fisk v. Kundert, 440 p.2d 690(Okla.1968)], but section 9-620 makes it clear that a personal property secured party may accept collateral in either full or partial satisfaction of the secured obligation so long as the other conditions of this section are met; in a consumer transaction, however, the secured party is precluded from accepting collateral in partial satisfaction of the obligation, section 9-620(g) .

Section 9-620 eliminates the requirement that the secured party be in possession of the collateral, but if the collateral is consumer goods, the collateral cannot be in the possession of the debtor when the debtor consents to the acceptance, ( section 9-620(a)(3) ).

Section 9-620 codifies in great detail the requirements for a valid acceptance of collateral in full or partial satisfaction of the obligation it secures.

Section 9-620 specifies time limits for objections to proposals to accept collateral in full or partial satisfaction of the obligation it secures, and reduces the days limit from 21 to 20 days, ( section 9-620(d) ).

Section 9-620(b) precludes a "constructive" strict foreclosure. See Comment 5. This rule changes current Oklahoma Law. See Farmers State Bank v. Ballew, 626 p.2d 337 (Okla. App. 1981), where the court stated that retention or use of collateral over an extended period of time after repossession may result in a satisfaction of the debt; and

Section 9-620(e)-(f) retains compulsory disposition of the collateral for certain consumer transactions, but subsection (f) allows a period greater than 90 days for disposition where the debtor and all secondary obligors agree to a longer period after default.

This section is set out more than once due to postponed, multiple, or conflicting amendments.