Arizona Laws 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:
Terms Used In Arizona Laws 47-9608
- Agricultural lien: means an interest, other than a security interest, in farm products:
(a) That secures payment or performance of an obligation for:
(i) Goods or services furnished in connection with a debtor's farming operation; or
(ii) Rent on real property leased by a debtor in connection with its farming operation;
(b) That is created by statute in favor of a person that:
(i) In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; or
(ii) Leased real property to a debtor in connection with the debtor's farming operation; and
(c) Whose effectiveness does not depend on the person's possession of the personal property. See Arizona Laws 47-9102
- Cash proceeds: means proceeds that are money, checks, deposit accounts or the like. See Arizona Laws 47-9102
- Chattel paper: means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods or a lease of specific goods and license of software used in the goods. See Arizona Laws 47-9102
- Collateral: means the property subject to a security interest or agricultural lien. See Arizona Laws 47-9102
- Debtor: means :
(a) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;
(b) A seller of accounts, chattel paper, payment intangibles or promissory notes; or
(c) A consignee. See Arizona Laws 47-9102
- Lien: A claim against real or personal property in satisfaction of a debt.
- Noncash proceeds: means proceeds other than cash proceeds. See Arizona Laws 47-9102
- 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.
- Obligor: means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, owes payment or other performance of the obligation, has provided property other than the collateral to secure payment or other performance of the obligation or is otherwise accountable in whole or in part for payment or other performance of the obligation. See Arizona Laws 47-9102
- Secured party: means :
(a) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
(b) A person that holds an agricultural lien;
(c) A consignor;
(d) A person to which accounts, chattel paper, payment intangibles or promissory notes have been sold;
(e) A trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or
(f) A person that holds a security interest arising under section 47-2401, 47-2505, 47-2711, 47-2A508, 47-4210 or 47-5118. See Arizona Laws 47-9102
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.