47-9608. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus
A. If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:
1. A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under section 47-9607 in the following order to:
(a) The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;
(b) The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and
(c) The satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed.
2. If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under paragraph 1, subdivision (c).
3. A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under section 47-9607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
4. A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.
B. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.
Section: Previous 47-9601 47-9602 47-9603 47-9604 47-9605 47-9606 47-9607 47-9608 47-9609 47-9610 47-9611 47-9612 47-9613 47-9614 47-9615 NextLast modified: October 13, 2016