§ 6A-9-608 - Application of proceeds of collection or enforcement; liability for deficiency and right to surplus. - Rhode Island Statutes

SECTION 6A-9-608

   § 6A-9-608  Application of proceeds ofcollection or enforcement; liability for deficiency and right to surplus.– (a) Application of proceeds, surplus, and deficiency if obligationsecured. If a security interest or agricultural lien secures payment orperformance of an obligation, the following rules apply:

   (1) A secured party shall apply or pay over for applicationthe cash proceeds of collection or enforcement under § 6A-9-607 in thefollowing order to:

   (i) The reasonable expenses of collection and enforcementand, to the extent provided for by agreement and not prohibited by law,reasonable attorney's fees and legal expenses incurred by the secured party;

   (ii) The satisfaction of obligations secured by the securityinterest or agricultural lien under which the collection or enforcement ismade; and

   (iii) The satisfaction of obligations secured by anysubordinate security interest in or other lien on the collateral subject to thesecurity interest or agricultural lien under which the collection orenforcement is made if the secured party receives an authenticated demand forproceeds before distribution of the proceeds is completed.

   (2) If requested by a secured party, a holder of asubordinate security interest or other lien shall furnish reasonable proof ofthe interest or lien within a reasonable time. Unless the holder complies, thesecured party need not comply with the holder's demand under paragraph (1)(iii).

   (3) A secured party need not apply or pay over forapplication noncash proceeds of collection and enforcement under §6A-9-607 unless the failure to do so would be commercially unreasonable. Asecured party that applies or pays over for application noncash proceeds shalldo so in a commercially reasonable manner.

   (4) A secured party shall account to and pay a debtor for anysurplus, and the obligor is liable for any deficiency.

   (b) No surplus or deficiency in sales of certain rights topayment. If the underlying transaction is a sale of accounts, chattelpaper, payment intangibles, or promissory notes, the debtor is not entitled toany surplus, and the obligor is not liable for any deficiency.