8.9A-608 - A-608. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus. - Virginia Statutes

§ 8.9A-608. Application of proceeds of collection or enforcement; liabilityfor deficiency and right to surplus.

(a) Application of proceeds, surplus, and deficiency if obligation secured.If a security interest or agricultural lien secures payment or performance ofan obligation, the following rules apply:

(1) A secured party shall apply or pay over for application the cash proceedsof collection or enforcement under § 8.9A-607 in the following order to:

(A) the reasonable expenses of collection and enforcement and, to the extentprovided for by agreement and not prohibited by law, reasonable attorney'sfees and legal expenses incurred by the secured party;

(B) the satisfaction of obligations secured by the security interest oragricultural lien under which the collection or enforcement is made; and

(C) the satisfaction of obligations secured by any subordinate securityinterest in or other lien on the collateral subject to the security interestor agricultural lien under which the collection or enforcement is made if thesecured party receives an authenticated demand for proceeds beforedistribution of the proceeds is completed.

(2) If requested by a secured party, a holder of a subordinate securityinterest or other lien shall furnish reasonable proof of the interest or lienwithin a reasonable time. Unless the holder complies, the secured party neednot comply with the holder's demand under subsection (a) (1) (C).

(3) A secured party need not apply or pay over for application noncashproceeds of collection and enforcement under § 8.9A-607 unless the failure todo so would be commercially unreasonable. A secured party that applies orpays over for application noncash proceeds shall do so in a commerciallyreasonable manner.

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

(b) No surplus or deficiency in sales of certain rights to payment. If theunderlying transaction is a sale of accounts, chattel paper, paymentintangibles, or promissory notes, the debtor is not entitled to any surplus,and the obligor is not liable for any deficiency.

(2000, c. 1007.)