§ 25-2A-304. Subsequent lease of goods by lessor. - North Carolina Statutes

§25‑2A‑304.  Subsequent lease of goods by lessor.

(1)        Subject to G.S. 25‑2A‑303,a subsequent lessee from a lessor of goods under an existing lease contractobtains, to the extent of the leasehold interest transferred, the leaseholdinterest in the goods that the lessor had or had power to transfer, and exceptas provided in subsection (2) of this section and G.S. 25‑2A‑527(4),takes subject to the existing lease contract.  A lessor with voidable title haspower to transfer a good leasehold interest to a good faith subsequent lesseefor value, but only to the extent set forth in the preceding sentence.  Ifgoods have been delivered under a transaction of purchase, the lessor has thatpower even though:

(a)        the lessor'stransferor was deceived as to the identity of the lessor;

(b)        the delivery was inexchange for a check which is later dishonored;

(c)        it was agreed thatthe transaction was to be a "cash sale"; or

(d)        the delivery wasprocured through fraud punishable as larcenous under the criminal law.

(2)        A subsequent lesseein the ordinary course of business from a lessor who is a merchant dealing ingoods of that kind to whom the goods were entrusted by the existing lessee ofthat lessor before the interest of the subsequent lessee became enforceable againstthat lessor obtains, to the extent of the leasehold interest transferred, allof that lessor's and the existing lessee's rights to the goods, and takes freeof the existing lease contract.

(3)        A subsequent lesseefrom the lessor of goods that are subject to an existing lease contract and arecovered by a certificate of title issued under a statute of this State or ofanother jurisdiction takes no greater rights than those provided both by thissection and by the certificate of title statute. (1993, c. 463, s. 1.)