Ohio Code 1309.620 – Acceptance of collateral in full or partial satisfaction of obligation – compulsory disposition of collateral – UCC 9-620
(A) Except as otherwise provided in division (G) of this section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:
Terms Used In Ohio Code 1309.620
- 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
- Consumer goods: means goods that are used or bought for use primarily for personal, family, or household purposes. See Ohio Code 1309.102
- Consumer transaction: means a transaction in which: (a) an individual incurs an obligation primarily for personal, family, or household purposes, (b) a security interest secures the obligation, and (c) the collateral is held or acquired primarily for personal, family, or household purposes. 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
- Goods: includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes, and (v) manufactured homes. 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.
- Person: includes an individual, corporation, business trust, estate, trust, partnership, and association. See Ohio Code 1.59
- Proposal: means a record authenticated by a secured party that includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to sections 1309. 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) The debtor consents to the acceptance under division (C) of this section;
(2) The secured party, within the time prescribed in division (D) of this section, does not receive a notification of objection to the proposal authenticated by:
(a) A person to whom the secured party was required to send a proposal under section 1309.621 of the Revised Code; 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) Division (E) of this section does not require the secured party to dispose of the collateral, or the debtor waives the requirement pursuant to section 1309.624 of the Revised Code.
(B) A purported or apparent acceptance of collateral under this section is not effective 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 division (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 days after the proposal is sent.
(D) To be effective under division (A)(2) of this section, a notification of objection must be received by the secured party:
(1) In the case of a person to whom the proposal was sent pursuant to section 1309.621 of the Revised Code, within twenty days after notification was sent to that person; and
(2) In the case of persons other than those described in division (D)(1) of this section:
(a) Within twenty days after the last notification was sent pursuant to section 1309.621 of the Revised Code; or
(b) If a notification was not sent, before the debtor consents to the acceptance under division (C) of this section.
(E) A secured party who has taken possession of collateral shall dispose of the collateral pursuant to section 1309.610 of the Revised Code within the time specified in division (F) of this section if:
(1) Sixty per cent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or
(2) Sixty per cent 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 division (E) of this section, the secured party shall dispose of the collateral:
(1) Within ninety 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.