Section 9-620 - Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral. - Maryland Statutes

§ 9-620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.
 

(a)  Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if: 

(1) The debtor consents to the acceptance under subsection (c); 

(2) The secured party does not receive, within the time set forth in subsection (d), a notification of objection to the proposal authenticated by: 

(A) A person to which the secured party was required to send a proposal under § 9-621; 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) Subsection (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to § 9-624. 

(b)  A purported or apparent acceptance of collateral under this section is ineffective 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 subsection (a) 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 20 days after the proposal is sent. 

(d)  To be effective under subsection (a) (2), a notification of objection must be received by the secured party: 

(1) In the case of a person to which the proposal was sent pursuant to § 9-621, within 20 days after notification was sent to that person; and 

(2) In other cases: 

(A) Within 20 days after the last notification was sent pursuant to § 9-621; or 

(B) If a notification was not sent, before the debtor consents to the acceptance under subsection (c). 

(e)  A secured party that has taken possession of collateral shall dispose of the collateral pursuant to § 9-610 within the time specified in subsection (f) if: 

(1) 60 percent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or 

(2) 60 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 subsection (e), the secured party shall dispose of the collateral: 

(1) Within 90 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. 
 

[1999, ch. 282, § 2.]