California Commercial Code 9620 – (a) Except as otherwise provided in subdivision (g), a secured …
(a) Except as otherwise provided in subdivision (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if all of the following conditions are satisfied:
(1) The debtor consents to the acceptance under subdivision (c).
Terms Used In California Commercial Code 9620
- agreement: means the total legal obligation that results from the parties' agreement as determined by this code and as supplemented by any other applicable laws. See California Commercial Code 1201
- Money: means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. See California Commercial Code 1201
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See California Commercial Code 1201
- Purchase: means taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property. See California Commercial Code 1201
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See California Commercial Code 1201
- Security interest: includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Division 9 (commencing with Section 9101). See California Commercial Code 1201
(2) The secured party does not receive, within the time set forth in subdivision (d), a notification of objection to the proposal signed by either of the following:
(A) A person to which the secured party was required to send a proposal under Section 9621.
(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.
(4) Subdivision (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to Section 9624.
(b) A purported or apparent acceptance of collateral under this section is ineffective unless both of the following conditions are satisfied:
(1) The secured party consents to the acceptance in a signed record or sends a proposal to the debtor.
(2) The conditions of subdivision (a) are met.
(c) For purposes of this section both of the following rules apply:
(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 signed after default.
(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 signed after default or the secured party does all of the following:
(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.
(C) Does not receive a notification of objection signed by the debtor within 20 days after the proposal is sent.
(d) To be effective under paragraph (2) of subdivision (a), a notification of objection must be received by the secured party as follows:
(1) In the case of a person to which the proposal was sent pursuant to Section 9621, within 20 days after notification was sent to that person.
(2) In other cases, in accordance with either of the following:
(A) Within 20 days after the last notification was sent pursuant to Section 9621.
(B) If a notification was not sent, before the debtor consents to the acceptance under subdivision (c).
(e) A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Section 9610 within the time specified in subdivision (f) if either of the following conditions has been satisfied:
(1) Sixty percent of the cash price has been paid in the case of a purchase money security interest in consumer goods.
(2) Sixty percent of the principal amount of the obligation secured has been paid in the case of a nonpurchase money security interest in consumer goods.
(f) To comply with subdivision (e), the secured party shall dispose of the collateral within either of the following time periods:
(1) Within 90 days after taking possession.
(2) Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and signed after default.
(g) In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.
(Amended by Stats. 2023, Ch. 210, Sec. 70. (SB 95) Effective January 1, 2024.)