SECTIONS 9201-9210 - California Statutes

COMMERCIAL CODE

SECTION 9201-9210

9201. (a) Except as otherwise provided in this code, a security
agreement is effective according to its terms between the parties,
against purchasers of the collateral, and against creditors.
(b) A transaction subject to this division is subject to any
applicable rule of law which establishes a different rule for
consumers; to Chapter 5 (commencing with Section 17200) of Part 2 of
Division 7 of the Business and Professions Code; Chapter 1
(commencing with Section 17500) of Part 3 of Division 7 of the
Business and Professions Code; the Retail Installment Sales Act,
Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of
Division 3 of the Civil Code; the Automobile Sales Finance Act,
Chapter 2b (commencing with Section 2981) of Title 14 of Part 4 of
Division 3 of the Civil Code; Part 4 (commencing with Section 1738)
of Division 3 of the Civil Code, with respect to the applicable
provisions of Titles 1 (commencing with Section 1738), 1.3
(commencing with Section 1747), 1.3A (commencing with Section
1748.10), 1.3B (commencing with Section 1748.20), 1.4 (commencing
with Section 1749), 1.5 (commencing with Section 1750), 1.6
(commencing with Section 1785.1), 1.61 (commencing with Section
1785.41), 1.6A (commencing with Section 1786), 1.6B (commencing with
Section 1787.1), 1.6C (commencing with Section 1788), 1.6D
(commencing with Section 1789), 1.6E (commencing with Section
1789.10), 1.6F (commencing with Section 1789.30), 1.7 (commencing
with Section 1790), 1.8 (commencing with Section 1798), 1.83
(commencing with Section 1799.5), 1.84 (commencing with Section
1799.8), 1.85 (commencing with Section 1799.90), 1.86 (commencing
with Section 1799.200), 2 (commencing with Section 1801), 2.4
(commencing with Section 1812.50), 2.5 (commencing with Section
1812.80), 2.6 (commencing with Section 1812.100), 2.7 (commencing
with Section 1812.200), 2.8 (commencing with Section 1812.300), 2.9
(commencing with Section 1812.400), 2.95 (commencing with Section
1812.600), 2.96 (commencing with Section 1812.620), 3 (commencing
with Section 1813), 4 (commencing with Section 1884), and 14
(commencing with Section 2872); the Industrial Loan Law, Division 7
(commencing with Section 18000) of the Financial Code; the Pawnbroker
Law, Division 8 (commencing with Section 21000) of the Financial
Code; the California Finance Lenders Law, Division 9 (commencing with
Section 22000) of the Financial Code; and the
Mobilehomes-Manufactured Housing Act of 1980, Part 2 (commencing with
Section 18000) of Division 13 of the Health and Safety Code; and to
any applicable consumer protection statute, regulation, or law.
(c) In case of conflict between this division and a rule of law,
statute, or regulation described in subdivision (b), the rule of law,
statute, or regulation controls. Failure to comply with a statute or
regulation described in subdivision (b) has only the effect the
statute or regulation specifies.
(d) This division does not do either of the following:
(1) Validate any rate, charge, agreement, or practice that
violates a rule of law, statute, or regulation described in
subdivision (b).
(2) Extend the application of the rule of law, statute, or
regulation to a transaction not otherwise subject to it.

9202. Except as otherwise provided with respect to consignments or
sales of accounts, chattel paper, payment intangibles, or promissory
notes, the provisions of this article with regard to rights and
obligations apply whether title to collateral is in the secured party
or the debtor.

9203. (a) A security interest attaches to collateral when it
becomes enforceable against the debtor with respect to the
collateral, unless an agreement expressly postpones the time of
attachment.
(b) Except as otherwise provided in subdivisions (c) to (i),
inclusive, a security interest is enforceable against the debtor and
third parties with respect to the collateral only if each of the
following conditions is satisfied:
(1) Value has been given.
(2) The debtor has rights in the collateral or the power to
transfer rights in the collateral to a secured party.
(3) One of the following conditions is met:
(A) The debtor has authenticated a security agreement that
provides a description of the collateral and, if the security
interest covers timber to be cut, a description of the land
concerned.
(B) The collateral is not a certificated security and is in the
possession of the secured party under Section 9313 pursuant to the
debtor's security agreement.
(C) The collateral is a certificated security in registered form
and the security certificate has been delivered to the secured party
under Section 8301 pursuant to the debtor's security agreement.
(D) The collateral is deposit accounts, electronic chattel paper,
investment property, letter-of-credit rights, or electronic documents
and the secured party has control under Section 7106, 9104, 9105,
9106, or 9107 pursuant to the debtor's security agreement.
(c) Subdivision (b) is subject to Section 4210 on the security
interest of a collecting bank, Section 5118 on the security interest
of a letter-of-credit issuer or nominated person, Section 9110 on a
security interest arising under Division 2 (commencing with Section
2101) or Division 10 (commencing with Section 10101), and Section
9206 on security interests in investment property.
(d) A person becomes bound as debtor by a security agreement
entered into by another person if, by operation of law other than
this division or by contract, either of the following conditions is
satisfied:
(1) The security agreement becomes effective to create a security
interest in the person's property.
(2) The person becomes generally obligated for the obligations of
the other person, including the obligation secured under the security
agreement, and acquires or succeeds to all or substantially all of
the assets of the other person.
(e) If a new debtor becomes bound as debtor by a security
agreement entered into by another person, both of the following
apply:
(1) The agreement satisfies paragraph (3) of subdivision (b) with
respect to existing or after-acquired property of the new debtor to
the extent the property is described in the agreement.
(2) Another agreement is not necessary to make a security interest
in the property enforceable.
(f) The attachment of a security interest in collateral gives the
secured party the rights to proceeds provided by Section 9315 and is
also attachment of a security interest in a supporting obligation for
the collateral.
(g) The attachment of a security interest in a right to payment or
performance secured by a security interest or other lien on personal
or real property is also attachment of a security interest in the
security interest, mortgage, or other lien.
(h) The attachment of a security interest in a securities account
is also attachment of a security interest in the security
entitlements carried in the securities account.
(i) The attachment of a security interest in a commodity account
is also attachment of a security interest in the commodity contracts
carried in the commodity account.

9204. (a) Except as otherwise provided in subdivision (b), a
security agreement may create or provide for a security interest in
after-acquired collateral.
(b) A security interest does not attach under a term constituting
an after-acquired property clause to either of the following:
(1) Consumer goods, other than an accession when given as
additional security, unless the debtor acquires rights in them within
10 days after the secured party gives value.
(2) A commercial tort claim.
(c) A security agreement may provide that collateral secures, or
that accounts, chattel paper, payment intangibles, or promissory
notes are sold in connection with, future advances or other value,
whether or not the advances or value are given pursuant to
commitment.

9205. (a) A security interest is not invalid or fraudulent against
creditors solely because either of the following applies:
(1) The debtor has the right or ability to do any of the
following:
(A) Use, commingle, or dispose of all or part of the collateral,
including returned or repossessed goods.
(B) Collect, compromise, enforce, or otherwise deal with
collateral.
(C) Accept the return of collateral or make repossessions.
(D) Use, commingle, or dispose of proceeds.
(2) The secured party fails to require the debtor to account for
proceeds or replace collateral.
(b) This section does not relax the requirements of possession if
attachment, perfection, or enforcement of a security interest depends
upon possession of the collateral by the secured party.

9206. (a) A security interest in favor of a securities intermediary
attaches to a person's security entitlement if both of the following
conditions are satisfied:
(1) The person buys a financial asset through the securities
intermediary in a transaction in which the person is obligated to pay
the purchase price to the securities intermediary at the time of the
purchase.
(2) The securities intermediary credits the financial asset to the
buyer's securities account before the buyer pays the securities
intermediary.
(b) The security interest described in subdivision (a) secures the
person's obligation to pay for the financial asset.
(c) A security interest in favor of a person that delivers a
certificated security or other financial asset represented by a
writing attaches to the security or other financial asset if both of
the following conditions are satisfied:
(1) The security or other financial asset satisfies both of the
following:
(A) In the ordinary course of business it is transferred by
delivery with any necessary endorsement or assignment.
(B) It is delivered under an agreement between persons in the
business of dealing with those securities or financial assets.
(2) The agreement calls for delivery against payment.
(d) The security interest described in subdivision (c) secures the
obligation to make payment for the delivery.

9207. (a) Except as otherwise provided in subdivision (d), a
secured party shall use reasonable care in the custody and
preservation of collateral in the secured party's possession. In the
case of chattel paper or an instrument, reasonable care includes
taking necessary steps to preserve rights against prior parties
unless otherwise agreed.
(b) Except as otherwise provided in subdivision (d), if a secured
party has possession of collateral, all of the following apply:
(1) Reasonable expenses, including the cost of insurance and
payment of taxes or other charges, incurred in the custody,
preservation, use, or operation of the collateral are chargeable to
the debtor and are secured by the collateral.
(2) The risk of accidental loss or damage is on the debtor to the
extent of a deficiency in any effective insurance coverage.
(3) The secured party shall keep the collateral identifiable, but
fungible collateral may be commingled.
(4) The secured party may use or operate the collateral for any of
the following purposes:
(A) For the purpose of preserving the collateral or its value.
(B) As permitted by an order of a court having competent
jurisdiction.
(C) Except in the case of consumer goods, in the manner and to the
extent agreed by the debtor.
(c) Except as otherwise provided in subdivision (d), a secured
party having possession of collateral or control of collateral under
Section 7106, 9104, 9105, 9106, or 9107 may or shall, as the case may
be, do all of the following:
(1) May hold as additional security any proceeds, except money or
funds, received from the collateral.
(2) Shall apply money or funds received from the collateral to
reduce the secured obligation, unless remitted to the debtor.
(3) May create a security interest in the collateral.
(d) If the secured party is a buyer of accounts, chattel paper,
payment intangibles, or promissory notes or a consignor, both of the
following apply:
(1) Subdivision (a) does not apply unless the secured party is
entitled under an agreement to either of the following:
(A) To charge back uncollected collateral.
(B) Otherwise to full or limited recourse against the debtor or a
secondary obligor based on the nonpayment or other default of an
account debtor or other obligor on the collateral.
(2) Subdivisions (b) and (c) do not apply.

9208. (a) This section applies to cases in which there is no
outstanding secured obligation and the secured party is not committed
to make advances, incur obligations, or otherwise give value.
(b) Within 10 days after receiving an authenticated demand by the
debtor, all of the following apply:
(1) A secured party having control of a deposit account under
paragraph (2) of subdivision (a) of Section 9104 shall send to the
bank with which the deposit account is maintained an authenticated
statement that releases the bank from any further obligation to
comply with instructions originated by the secured party.
(2) A secured party having control of a deposit account under
paragraph (3) of subdivision (a) of Section 9104 shall do either of
the following:
(A) Pay the debtor the balance on deposit in the deposit account.
(B) Transfer the balance on deposit into a deposit account in the
debtor's name.
(3) A secured party, other than a buyer, having control of
electronic chattel paper under Section 9105 shall do all of the
following:
(A) Communicate the authoritative copy of the electronic chattel
paper to the debtor or its designated custodian.
(B) If the debtor designates a custodian that is the designated
custodian with which the authoritative copy of the electronic chattel
paper is maintained for the secured party, communicate to the
custodian an authenticated record releasing the designated custodian
from any further obligation to comply with instructions originated by
the secured party and instructing the custodian to comply with
instructions originated by the debtor.
(C) Take appropriate action to enable the debtor or its designated
custodian to make copies of or revisions to the authoritative copy
which add or change an identified assignee of the authoritative copy
without the consent of the secured party.
(4) A secured party having control of investment property under
paragraph (2) of subdivision (d) of Section 8106 or under subdivision
(b) of Section 9106 shall send to the securities intermediary or
commodity intermediary with which the security entitlement or
commodity contract is maintained an authenticated record that
releases the securities intermediary or commodity intermediary from
any further obligation to comply with entitlement orders or
directions originated by the secured party.
(5) A secured party having control of a letter-of-credit right
under Section 9107 shall send to each person having an unfulfilled
obligation to pay or deliver proceeds of the letter of credit to the
secured party an authenticated release from any further obligation to
pay or deliver proceeds of the letter of credit to the secured
party.
(6) A secured party having control of an electronic document under
Section 7106 shall:
(A) give control of the electronic document to the debtor or its
designated custodian;
(B) if the debtor designates a custodian that is the designated
custodian with which the authoritative copy of the electronic
document is maintained for the secured party, communicate to the
custodian an authenticated record releasing the designated custodian
from any further obligation to comply with instructions originated by
the secured party and instructing the custodian to comply with
instructions originated by the debtor; and
(C) take appropriate action to enable the debtor or its designated
custodian to make copies of or revisions to the authoritative copy
which add or change an identified assignee of the authoritative copy
without the consent of the secured party.

9209. (a) Except as otherwise provided in subdivision (c), this
section applies if both of the following conditions are satisfied:
(1) There is no outstanding secured obligation.
(2) The secured party is not committed to make advances, incur
obligations, or otherwise give value.
(b) Within 10 days after receiving an authenticated demand by the
debtor, a secured party shall send to an account debtor that has
received notification of an assignment to the secured party as
assignee under subdivision (a) of Section 9406 an authenticated
record that releases the account debtor from any further obligation
to the secured party.
(c) This section does not apply to an assignment constituting the
sale of an account, chattel paper, or payment intangible.

9210. (a) In this section:
(1) "Request" means a record of a type described in paragraph (2),
(3), or (4).
(2) "Request for an accounting" means a record authenticated by a
debtor requesting that the recipient provide an accounting of the
unpaid obligations secured by collateral and reasonably identifying
the transaction or relationship that is the subject of the request.
(3) "Request regarding a list of collateral" means a record
authenticated by a debtor requesting that the recipient approve or
correct a list of what the debtor believes to be the collateral
securing an obligation and reasonably identifying the transaction or
relationship that is the subject of the request.
(4) "Request regarding a statement of account" means a record
authenticated by a debtor requesting that the recipient approve or
correct a statement indicating what the debtor believes to be the
aggregate amount of unpaid obligations secured by collateral as of a
specified date and reasonably identifying the transaction or
relationship that is the subject of the request.
(b) Subject to subdivisions (c), (d), (e), and (f), a secured
party, other than a buyer of accounts, chattel paper, payment
intangibles, or promissory notes or a consignor, shall comply with a
request within 14 days after receipt as follows:
(1) In the case of a request for an accounting, by authenticating
and sending to the debtor an accounting.
(2) In the case of a request regarding a list of collateral or a
request regarding a statement of account, by authenticating and
sending to the debtor an approval or correction.
(c) A secured party that claims a security interest in all of a
particular type of collateral owned by the debtor may comply with a
request regarding a list of collateral by sending to the debtor an
authenticated record including a statement to that effect within 14
days after receipt.
(d) A person that receives a request regarding a list of
collateral, claims no interest in the collateral when it receives the
request, and claimed an interest in the collateral at an earlier
time shall comply with the request within 14 days after receipt by
sending to the debtor an authenticated record that contains both of
the following:
(1) It disclaims any interest in the collateral.
(2) If known to the recipient, it provides the name and mailing
address of any assignee of or successor to the recipient's interest
in the collateral.
(e) A person that receives a request for an accounting or a
request regarding a statement of account, claims no interest in the
obligations when it receives the request, and claimed an interest in
the obligations at an earlier time shall comply with the request
within 14 days after receipt by sending to the debtor an
authenticated record that contains both of the following:
(1) It disclaims any interest in the obligations.
(2) If known to the recipient, it provides the name and mailing
address of any assignee of or successor to the recipient's interest
in the obligations.
(f) A debtor is entitled without charge to one response to a
request under this section during any six-month period. The secured
party may require payment of a charge not exceeding twenty-five
dollars ($25) for each additional response.