8.9A-407 - A-407. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest. - Virginia Statutes

§ 8.9A-407. Restrictions on creation or enforcement of security interest inleasehold interest or in lessor's residual interest.

(a) Term restricting assignment generally ineffective. Except as otherwiseprovided in subsection (b), a term in a lease agreement is ineffective to theextent that it:

(1) prohibits, restricts, or requires the consent of a party to the lease tothe assignment or transfer of, or the creation, attachment, perfection, orenforcement of a security interest in, an interest of a party under the leasecontract or in the lessor's residual interest in the goods; or

(2) provides that the assignment or transfer or the creation, attachment,perfection, or enforcement of the security interest may give rise to adefault, breach, right of recoupment, claim, defense, termination, right oftermination, or remedy under the lease.

(b) Effectiveness of certain terms. Except as otherwise provided in §8.2A-303 (7), a term described in subsection (a) (2) is effective to theextent that there is:

(1) a transfer by the lessee of the lessee's right of possession or use ofthe goods in violation of the term; or

(2) a delegation of a material performance of either party to the leasecontract in violation of the term.

(c) Security interest not material impairment. The creation, attachment,perfection, or enforcement of a security interest in the lessor's interestunder the lease contract or the lessor's residual interest in the goods isnot a transfer that materially impairs the lessee's prospect of obtainingreturn performance or materially changes the duty of or materially increasesthe burden or risk imposed on the lessee within the purview of § 8.2A-303 (4)unless, and then only to the extent that, enforcement actually results in adelegation of material performance of the lessor.

(1991, c. 536, § 8.2A-303; 2000, c. 1007.)