§ 25-9-205. Use or disposition of collateral permissible. - North Carolina Statutes

§25‑9‑205.  Use or disposition of collateral permissible.

(a)        When securityinterest not invalid or fraudulent. – A security interest is not invalid orfraudulent against creditors solely because:

(1)        The debtor has theright or ability to:

a.         Use, commingle, ordispose of all or part of the collateral, including returned or repossessedgoods;

b.         Collect, compromise,enforce, or otherwise deal with collateral;

c.         Accept the return ofcollateral or make repossessions; or

d.         Use, commingle, ordispose of proceeds; or

(2)        The secured partyfails to require the debtor to account for proceeds or replace collateral.

(b)        Requirements ofpossession not relaxed. – This section does not relax the requirements ofpossession if attachment, perfection, or enforcement of a security interestdepends upon possession of the collateral by the secured party. (1945,c. 196, s. 7; 1965, c. 700, s. 1; 1975, c. 862, s. 7; 2000‑169, s. 1.)