(9-628) Nonliability and limitation on liability of secured party - Liability of secondary obligor
N.D. Cent. Code § 41-09-123
in effect41-09-123. (9-628) Nonliability and limitation on liability of secured party - Liability of
secondary obligor.
1. Subject to subsection 5, unless a secured party knows that a person is a debtor or
obligor, knows the identity of the person, and knows how to communicate with the
person:
a. The secured party is not liable to the person, or to a secured party or lienholder
that has filed a financing statement against the person, for failure to comply with
this chapter; and
b. The secured party's failure to comply with this chapter does not affect the liability
of the person for a deficiency.
2. Subject to subsection 5, a secured party is not liable because of its status as secured
party:
a. To a person that is a debtor or obligor, unless the secured party knows:
(1) That the person is a debtor or obligor;
(2) The identity of the person; and
(3) How to communicate with the person; or
b. To a secured party or lienholder that has filed a financing statement against a
person, unless the secured party knows:
(1) That the person is a debtor; and
(2) The identity of the person.
3. A secured party is not liable to any person, and a person's liability for a deficiency is
not affected, because of any act or omission arising out of the secured party's
reasonable belief that a transaction is not a consumer-goods transaction or a
consumer transaction or that goods are not consumer goods, if the secured party's
belief is based on its reasonable reliance on:
a. A debtor's representation concerning the purpose for which collateral was to be
used, acquired, or held; or
b. An obligor's representation concerning the purpose for which a secured obligation
was incurred.
4. A secured party is not liable under subdivision b of subsection 3 of section 41-09-120
more than once with respect to any one secured obligation.
5. Subsections 1 and 2 do not apply to limit the liability of a secured party to a person if,
at the time the secured party obtains control of collateral that is a controllable account,
controllable electronic record, or controllable payment intangible or at the time the
security interest attaches to the collateral, whichever is later:
a. The person is a debtor or obligor; and
b. The secured party knows that the information in subdivision a of subsection 2
relating to the person is not provided by the collateral, a record attached to or
logically associated with the collateral, or the system in which the collateral is
recorded.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://ndlegis.gov/cencode/t41c09.pdf#nameddest=41-09-123Fetched: 10/16/2026