Ohio Code 1309.608 – Application of proceeds of collection or enforcement – liability for deficiency and right to surplus – UCC 9-608
(A) If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:
Terms Used In Ohio Code 1309.608
- Account: includes health-care insurance receivables. See Ohio Code 1309.102
- 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. See Ohio Code 1309.102
- Cash proceeds: means proceeds that are money, checks, deposit accounts, or the like. See Ohio Code 1309.102
- Chattel paper: means a record that evidences 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 Ohio Code 1309.102
- Collateral: means the property subject to a security interest or agricultural lien, including:
(a) Proceeds to which a security interest attaches;
(b) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and
(c) Goods that are the subject of a consignment. See Ohio Code 1309.102
- 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 Ohio Code 1309.102
- Lien: A claim against real or personal property in satisfaction of a debt.
- Noncash proceeds: means proceeds other than cash proceeds. See Ohio Code 1309.102
- 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 who, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) is otherwise accountable in whole or in part for payment or other performance of the obligation. See Ohio Code 1309.102
- 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 whom 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 who holds a security interest arising under section 1302. See Ohio Code 1309.102
(1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under section 1309.607 of the Revised Code in the following order:
(a) The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney’s 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 is not required to comply with the holder’s demand made under division (A)(1)(c) of this section.
(3) A secured party is not required to apply or pay over for application noncash proceeds of collection and enforcement under section 1309.607 of the Revised Code unless the failure to do so would be commercially unreasonable. A secured party who 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.