13 Pa.C.S. Ch. 96

in effect

13 Pa.C.S. § 9601 Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles or promissory notes.

(a) Rights of secured party after default.--After default, a secured party has the rights provided in this chapter and, except as otherwise provided in section 9602 (relating to waiver and variance of rights and duties), those provided by agreement of the parties. A secured party: (1) may reduce a claim to judgment, foreclose or otherwise enforce the claim, security interest or agricultural lien by any available judicial procedure; and (2) if the collateral is documents, may proceed either as to the documents or as to the goods they cover. (b) Rights and duties of secured party in possession or control.--A secured party in possession of collateral or control of collateral under section 7106 (relating to control of electronic document of title), 9104 (relating to control of deposit account), 9105 (relating to control of electronic copy of record evidencing chattel paper), 9106 (relating to control of investment property), 9107 (relating to control of letter-of-credit right) or 9107.1 (relating to control of controllable electronic record, controllable account or controllable payment intangible) has the rights and duties provided in section 9207 (relating to rights and duties of secured party having possession or control of collateral). (c) Rights cumulative; simultaneous exercise.--The rights under subsections (a) and (b) are cumulative and may be exercised simultaneously. (d) Rights of debtor and obligor.--Except as otherwise provided in subsection (g) and section 9605 (relating to unknown debtor or secondary obligor), after default, a debtor and an obligor have the rights provided in this chapter and by agreement of the parties. (e) Lien of levy after judgment.--If a secured party has reduced its claim to judgment, the lien of any levy which may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of: (1) the date of perfection of the security interest or agricultural lien in the collateral; (2) the date of filing a financing statement covering the collateral; or (3) any date specified in a statute under which the agricultural lien was created. (f) Execution sale.--A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this division. (g) Consignor or buyer of certain rights to payment.--Except as otherwise provided in section 9607(c) (relating to commercially reasonable collection and enforcement), this chapter imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles or promissory notes. (Apr. 16, 2008, P.L.57, No.13, eff. 60 days; July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (b). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations.

13 Pa.C.S. § 9602 Waiver and variance of rights and duties.

Except as otherwise provided in section 9624 (relating to waiver), to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in: (1) section 9207(b)(4)(iii) (relating to expenses, risks, duties and rights when secured party in possession); (2) section 9210 (relating to request for accounting; request regarding list of collateral or statement of account); (3) section 9607(c) (relating to commercially reasonable collection and enforcement); (4) sections 9608(a) (relating to application of proceeds, surplus and deficiency if obligation secured) and 9615(c) (relating to application of noncash proceeds) to the extent that they deal with application or payment of noncash proceeds of collection, enforcement or disposition; (5) sections 9608(a) and 9615(d) (relating to surplus or deficiency if obligation secured) to the extent that they require accounting for or payment of surplus proceeds of collateral; (6) section 9609 (relating to secured party's right to take possession after default) to the extent that it imposes upon a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace; (7) sections 9610(b) (relating to commercially reasonable disposition), 9611 (relating to notification before disposition of collateral), 9613 (relating to contents and form of notification before disposition of collateral: general) and 9614 (relating to contents and form of notification before disposition of collateral: consumer-goods transaction); (8) section 9615(f) (relating to calculation of surplus or deficiency in disposition to person related to secured party); (9) section 9616 (relating to explanation of calculation of surplus or deficiency); (10) sections 9620 (relating to acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral), 9621 (relating to notification of proposal to accept collateral) and 9622 (relating to effect of acceptance of collateral); (11) section 9623 (relating to right to redeem collateral); (12) section 9624 (relating to waiver); and (13) sections 9625 (relating to remedies for secured party's failure to comply with division) and 9626 (relating to action in which deficiency or surplus is in issue). Cross References. Section 9602 is referred to in sections 9601, 9603 of this title.

13 Pa.C.S. § 9603 Agreement on standards concerning rights and duties.

(a) Agreed standards.--The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in section 9602 (relating to waiver and variance of rights and duties) if the standards are not manifestly unreasonable. (b) Agreed standards inapplicable to breach of peace.--Subsection (a) does not apply to the duty under section 9609 (relating to secured party's right to take possession after default) to refrain from breaching the peace.

13 Pa.C.S. § 9604 Procedure if security agreement covers real property or fixtures.

(a) Enforcement: personal and real property.--If a security agreement covers both personal and real property, a secured party may proceed: (1) under this chapter as to the personal property without prejudicing any rights with respect to the real property; or (2) as to both the personal property and the real property in accordance with the rights with respect to the real property, in which case the other provisions of this chapter do not apply. (b) Enforcement: fixtures.--Subject to subsection (c), if a security agreement covers goods which are or become fixtures, a secured party may proceed: (1) under this chapter; or (2) in accordance with the rights with respect to real property, in which case the other provisions of this chapter do not apply. (c) Removal of fixtures.--Subject to the other provisions of this chapter, if a secured party holding a security interest in fixtures has priority over all owners and encumbrancers of the real property, the secured party, after default, may remove the collateral from the real property. (d) Injury caused by removal.--A secured party that removes collateral shall promptly reimburse any encumbrancer or owner of the real property, other than the debtor, for the cost of repair of any physical injury caused by the removal. The secured party need not reimburse the encumbrancer or owner for any diminution in value of the real property caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse. Cross References. Section 9604 is referred to in section 9109 of this title.

13 Pa.C.S. § 9605 Unknown debtor or secondary obligor.

(a) In general: no duty owed by secured party.--Except as provided in subsection (b), a secured party does not owe a duty based on its status as secured party to any of the following: (1) A person that is a debtor or obligor unless the secured party knows: (i) that the person is a debtor or obligor; (ii) the identity of the person; and (iii) how to communicate with the person. (2) A secured party or lienholder that has filed a financing statement against a person unless the secured party knows: (i) that the person is a debtor; and (ii) the identity of the person. (b) Exception: secured party owes duty to debtor or obligor.--A secured party owes a duty based on its status as 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: (1) the person is a debtor or obligor; and (2) the secured party knows that the information in subsection (a)(1) 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. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9605 is referred to in section 9601 of this title.

13 Pa.C.S. § 9606 Time of default for agricultural lien.

For purposes of this chapter, a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created.

13 Pa.C.S. § 9607 Collection and enforcement by secured party.

(a) Collection and enforcement generally.--If so agreed, and in any event after default, a secured party: (1) may notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party; (2) may take any proceeds to which the secured party is entitled under section 9315 (relating to secured party's rights on disposition of collateral and in proceeds); (3) may enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor and with respect to any property which secures the obligations of the account debtor or other person obligated on the collateral; (4) if the secured party holds a security interest in a deposit account perfected by control under section 9104(a)(1) (relating to requirements for control), may apply the balance of the deposit account to the obligation secured by the deposit account; and (5) if the secured party holds a security interest in a deposit account perfected by control under section 9104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party. (b) Nonjudicial enforcement of mortgage.--If necessary to enable a secured party to exercise under subsection (a)(3) the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded: (1) A copy of the security agreement which creates or provides for a security interest in the obligation secured by the mortgage. (2) The secured party's sworn affidavit in recordable form stating that: (i) a default has occurred with respect to the obligation secured by the mortgage; and (ii) the secured party is entitled to enforce the mortgage nonjudicially. (c) Commercially reasonable collection and enforcement.--A secured party shall proceed in a commercially reasonable manner if the secured party: (1) undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and (2) is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor. (d) Expenses of collection and enforcement.--A secured party may deduct from the collections made pursuant to subsection (c) reasonable expenses of collection and enforcement, including reasonable attorney fees and legal expenses incurred by the secured party. (e) Duties to secured party not affected.--This section does not determine whether an account debtor, bank or other person obligated on collateral owes a duty to a secured party. (June 27, 2013, P.L.154, No.30, eff. July 1, 2013) 2013 Amendment. Act 30 amended subsec. (b)(2)(i). Cross References. Section 9607 is referred to in sections 9601, 9602, 9608, 9623 of this title.

13 Pa.C.S. § 9608 Application of proceeds of collection or enforcement; liability for 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 of an obligation, the following rules apply: (1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under section 9607 (relating to collection and enforcement by secured party) in the following order to: (i) the reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party; (ii) the satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and (iii) the satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives a signed demand for proceeds before distribution of the proceeds is completed. (2) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under paragraph (1)(iii). (3) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under section 9607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner. (4) A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency. (b) No surplus or deficiency in sales of certain rights to payment.--If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes, the debtor is not entitled to any surplus and the obligor is not liable for any deficiency. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a)(1). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9608 is referred to in section 9602 of this title.

13 Pa.C.S. § 9609 Secured party's right to take possession after default.

(a) Possession; rendering equipment unusable; disposition on debtor's premises.--After default, a secured party: (1) may take possession of the collateral; and (2) without removal, may render equipment unusable and dispose of collateral on a debtor's premises under section 9610 (relating to disposition of collateral after default). (b) Judicial and nonjudicial process.--A secured party may proceed under subsection (a): (1) pursuant to judicial process; or (2) without judicial process if it proceeds without breach of the peace. (c) Assembly of collateral.--If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties. Cross References. Section 9609 is referred to in sections 9102, 9602, 9603 of this title.

13 Pa.C.S. § 9610 Disposition of collateral after default.

(a) Disposition after default.--After default, a secured party may sell, lease, license or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing. (b) Commercially reasonable disposition.--Every aspect of a disposition of collateral, including the method, manner, time, place and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels and at any time and place and on any terms. (c) Purchase by secured party.--A secured party may purchase collateral: (1) at a public disposition; or (2) at a private disposition only if the collateral is of a kind which is customarily sold on a recognized market or the subject of widely distributed standard price quotations. (d) Warranties on disposition.--A contract for sale, lease, license or other disposition includes the warranties relating to title, possession, quiet enjoyment and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract. (e) Disclaimer of warranties.--A secured party may disclaim or modify warranties under subsection (d): (1) in a manner which would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or (2) by communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties. (f) Record sufficient to disclaim warranties.--A record is sufficient to disclaim warranties under subsection (e) if it indicates "There is no warranty relating to title, possession, quiet enjoyment or the like in this disposition" or uses words of similar import. Cross References. Section 9610 is referred to in sections 9408, 9602, 9609, 9611, 9615, 9616, 9618, 9620, 9623 of this title.

13 Pa.C.S. § 9611 Notification before disposition of collateral.

(a) Notification date.--As used in this section, the term "notification date" means the earlier of the date on which: (1) a secured party sends to the debtor and any secondary obligor a signed notification of disposition; or (2) the debtor and any secondary obligor waive the right to notification. (b) Notification of disposition required.--Except as otherwise provided in subsection (d), a secured party that disposes of collateral under section 9610 (relating to disposition of collateral after default) shall send to the persons specified in subsection (c) a reasonable signed notification of disposition. (c) Persons to be notified.--To comply with subsection (b), the secured party shall send a signed notification of disposition to all of the following: (1) The debtor. (2) Any secondary obligor. (3) If the collateral is other than consumer goods, all of the following: (i) Any other person from which the secured party has received, before the notification date, a signed notification of a claim of an interest in the collateral. (ii) Any other secured party or lienholder that, ten days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement which: (A) identified the collateral; (B) was indexed under the debtor's name as of that date; and (C) was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date. (iii) Any other secured party that, ten days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in section 9311(a) (relating to security interest subject to other law). (d) Subsection (b) inapplicable: perishable collateral; recognized market.--Subsection (b) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market. (e) Compliance with subsection (c)(3)(ii).--A secured party complies with the requirement for notification prescribed by subsection (c)(3)(ii) if both of the following paragraphs apply: (1) Not later than 20 days or earlier than 30 days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in subsection (c)(3)(ii). (2) Before the notification date, the secured party: (i) did not receive a response to the request for information; or (ii) received a response to the request for information and sent a signed notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsecs. (a), (b), (c) and (e). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9611 is referred to in sections 9602, 9624 of this title.

13 Pa.C.S. § 9612 Timeliness of notification before disposition of collateral.

(a) Reasonable time is question of fact.--Except as otherwise provided in subsection (b), whether a notification is sent within a reasonable time is a question of fact. (b) Ten-day period sufficient in nonconsumer transaction.--In a transaction other than a consumer transaction, a notification of disposition sent after default and ten days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.

13 Pa.C.S. § 9613 Contents and form of notification before disposition of collateral: general.

(a) Contents and form of notification.--Except in a consumer-goods transaction, the following rules apply: (1) The contents of a notification of disposition are sufficient if the notification: (i) describes the debtor and the secured party; (ii) describes the collateral which is the subject of the intended disposition; (iii) states the method of intended disposition; (iv) states that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and (v) states the time and place of a public disposition or the time after which any other disposition is to be made. (2) Whether the contents of a notification which lacks any of the information specified in paragraph (1) are nevertheless sufficient is a question of fact. (3) The contents of a notification providing substantially the information specified in paragraph (1) are sufficient even if the notification includes: (i) information not specified by that paragraph; or (ii) minor errors which are not seriously misleading. (4) A particular phrasing of the notification is not required. (5) The following form of notification and the form appearing in section 9614(a)(3) (relating to contents and form of notification before disposition of collateral: consumer-goods transaction), when completed in accordance with the instructions in subsection (b) and section 9614(b), each provides sufficient information: NOTIFICATION OF DISPOSITION OF COLLATERAL To: (Name of debtor, obligor, or other person to which the notification is sent) From: (Name, address, and telephone number of secured party) {1} Name of any debtor that is not an addressee: (Name of each debtor) {2} We will sell (describe collateral) (to the highest qualified bidder) at public sale. A sale could include a lease or license. The sale will be held as follows: (Date) (Time) (Place) {3} We will sell (describe collateral) at private sale sometime after (date). A sale could include a lease or license. {4} You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell or, as applicable, lease or license. {5} If you request an accounting you must pay a charge of $ (amount). {6} You may request an accounting by calling us at (telephone number). (End of Form) (b) Instructions for form of notification.--The following instructions apply to the form of notification in subsection (a)(5): (1) The instructions in this subsection refer to the numbers in braces before items in the form of notification in subsection (a)(5). Do not include the numbers or braces in the notification. The numbers and braces are used only for the purpose of these instructions. (2) Include and complete item {1} only if there is a debtor that is not an addressee of the notification and list the name or names. (3) Include and complete either item {2}, if the notification relates to a public disposition of the collateral, or item {3}, if the notification relates to a private disposition of the collateral. If item {2} is included, include the words "to the highest qualified bidder" only if applicable. (4) Include and complete items {4} and {6}. (5) Include and complete item {5} only if the sender will charge the recipient for an accounting. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9613 is referred to in sections 9602, 9614 of this title.

13 Pa.C.S. § 9614 Contents and form of notification before disposition of collateral: consumer-goods transaction.

(a) Contents and form of notification.--In a consumer-goods transaction, the following rules apply: (1) A notification of disposition must provide the following information: (i) the information specified in section 9613(a)(1) (relating to contents and form of notification before disposition of collateral: general); (ii) a description of any liability for a deficiency of the person to which the notification is sent; (iii) a telephone number from which the amount which must be paid to the secured party to redeem the collateral under section 9623 (relating to right to redeem collateral) is available; and (iv) a telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available. (2) A particular phrasing of the notification is not required. (3) The following form of notification, when completed in accordance with the instructions in subsection (b), provides sufficient information: (Name and address of secured party) (Date) NOTICE OF OUR PLAN TO SELL PROPERTY (Name and address of any obligor who is also a debtor) Subject: (Identify transaction) We have your (describe collateral), because you broke promises in our agreement. {1} We will sell (describe collateral) at public sale. A sale could include a lease or license. The sale will be held as follows: (Date) (Time) (Place) You may attend the sale and bring bidders if you want. {2} We will sell (describe collateral) at private sale sometime after (date). A sale could include a lease or license. {3} The money that we get from the sale, after paying our costs, will reduce the amount you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else. {4} You can get the property back at any time before we sell it by paying us the full amount you owe, not just the past due payments, including our expenses. To learn the exact amount you must pay, call us at (telephone number). {5} If you want us to explain to you in (writing) (writing or in (description of electronic record)) (description of electronic record) how we have figured the amount that you owe us, {6} call us at (telephone number) (or) (write us at (secured party's address)) (or contact us by (description of electronic communication method)) {7} and request (a written explanation) (a written explanation or an explanation in (description of electronic record)) (an explanation in (description of electronic record)). {8} We will charge you $ (amount) for the explanation if we sent you another written explanation of the amount you owe us within the last six months. {9} If you need more information about the sale (call us at (telephone number)) (or) (write us at (secured party's address)) (or contact us by (description of electronic communication method)). {10} We are sending this notice to the following other people who have an interest in (describe collateral) or who owe money under your agreement: (Names of all other debtors and obligors, if any) (End of Form) (b) Instructions for form of notification.--The following instructions apply to the form of notification in subsection (a)(3): (1) The instructions in this subsection refer to the numbers in braces before items in the form of notification in subsection (a)(3). Do not include the numbers or braces in the notification. The numbers and braces are used only for the purpose of these instructions. (2) Include and complete either item {1}, if the notification relates to a public disposition of the collateral, or item {2}, if the notification relates to a private disposition of the collateral. (3) Include and complete items {3}, {4}, {5}, {6} and {7}. (4) In item {5}, include and complete any one of the three alternative methods for the explanation--writing, writing or electronic record or electronic record. (5) In item {6}, include the telephone number. In addition, the sender may include and complete either or both of the two additional alternative methods of communication--writing or electronic communication--for the recipient of the notification to communicate with the sender. Neither of the two additional methods of communication is required to be included. (6) In item {7}, include and complete the method or methods for the explanation--writing, writing or electronic record or electronic record--included in item {5}. (7) Include and complete item {8} only if a written explanation is included in item {5} as a method for communicating the explanation and the sender will charge the recipient for another written explanation. (8) In item {9}, include either the telephone number or the address or both the telephone number and the address. In addition, the sender may include and complete the additional method of communication--electronic communication for the recipient of the notification to communicate with the sender. The additional method of electronic communication is not required to be included. (9) If item {10} does not apply, insert "None" after "agreement:." (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9614 is referred to in sections 9602, 9613 of this title.

13 Pa.C.S. § 9615 Application of proceeds of disposition; liability for deficiency and right to surplus.

(a) Application of proceeds.--A secured party shall apply or pay over for application the cash proceeds of disposition under section 9610 (relating to disposition of collateral after default) in the following order to: (1) The reasonable expenses of retaking, holding, preparing for disposition, processing and disposing and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party. (2) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made. (3) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if: (i) the secured party receives from the holder of the subordinate security interest or other lien a signed demand for proceeds before distribution of the proceeds is completed; and (ii) in a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor. (4) A secured party that is a consignor of the collateral if the secured party receives from the consignor a signed demand for proceeds before distribution of the proceeds is completed. (b) Proof of subordinate interest.--If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under subsection (a)(3). (c) Application of noncash proceeds.--A secured party need not apply or pay over for application noncash proceeds of disposition under section 9610 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner. (d) Surplus or deficiency if obligation secured.--If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subsection (a) and permitted by subsection (c): (1) unless subsection (a)(4) requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and (2) the obligor is liable for any deficiency. (e) No surplus or deficiency in sales of certain rights to payment.--If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes: (1) the debtor is not entitled to any surplus; and (2) the obligor is not liable for any deficiency. (f) Calculation of surplus or deficiency in disposition to person related to secured party.--The surplus or deficiency following a disposition is calculated based on the amount of proceeds which would have been realized in a disposition complying with this chapter to a transferee other than the secured party, a person related to the secured party or a secondary obligor if: (1) the transferee in the disposition is the secured party, a person related to the secured party or a secondary obligor; and (2) the amount of proceeds of the disposition is significantly below the range of proceeds which a complying disposition to a person other than the secured party, a person related to the secured party or a secondary obligor would have brought. (g) Cash proceeds received by junior secured party.--A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien which is not subordinate to the security interest or agricultural lien under which the disposition is made: (1) takes the cash proceeds free of the security interest or other lien; (2) is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and (3) is not obligated to account to or pay the holder of the security interest or other lien for any surplus. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9615 is referred to in sections 9602, 9616, 9623, 9626 of this title.

13 Pa.C.S. § 9616 Explanation of calculation of surplus or deficiency.

(a) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection: "Explanation." A record which: (1) states the amount of the surplus or deficiency; (2) provides an explanation in accordance with subsection (c) of how the secured party calculated the surplus or deficiency; (3) states, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates and expenses may affect the amount of the surplus or deficiency; and (4) provides a telephone number or mailing address from which additional information concerning the transaction is available. "Request." A record: (1) signed by a debtor or consumer obligor; (2) requesting that the recipient provide an explanation; and (3) sent after disposition of the collateral under section 9610 (relating to disposition of collateral after default). (b) Explanation of calculation.--In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under section 9615 (relating to application of proceeds of disposition; liability for deficiency and right to surplus), the secured party shall comply with one of the following paragraphs: (1) Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and: (i) before or when the secured party accounts to the debtor and pays any surplus or first makes demand in a record on the consumer obligor after the disposition for payment of the deficiency; and (ii) within 14 days after receipt of a request. (2) In the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency. (c) Required information.--To comply with paragraph (2) of the definition of the term "explanation" in subsection (a), an explanation must provide the following information in the following order: (1) The aggregate amount of obligations secured by the security interest under which the disposition was made and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date: (i) if the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or (ii) if the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition. (2) The amount of proceeds of the disposition. (3) The aggregate amount of the obligations after deducting the amount of proceeds. (4) The amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing and disposing of the collateral and attorney fees secured by the collateral which are known to the secured party and relate to the current disposition. (5) The amount, in the aggregate or by type and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in paragraph (1). (6) The amount of the surplus or deficiency. (d) Substantial compliance.--A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of subsection (a) is sufficient even if it includes minor errors which are not seriously misleading. (e) Charges for responses.--A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to subsection (b)(1). The secured party may require payment of a charge not exceeding $25 for each additional response. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsecs. (a), (b) and (c). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9616 is referred to in sections 9602, 9625, 9628 of this title.

13 Pa.C.S. § 9617 Rights of transferee of collateral.

(a) Effects of disposition.--A secured party's disposition of collateral after default: (1) transfers to a transferee for value all of the debtor's rights in the collateral; (2) discharges the security interest under which the disposition is made; and (3) discharges any subordinate security interest or other subordinate lien. (b) Rights of good-faith transferee.--A transferee that acts in good faith takes free of the rights and interests described in subsection (a) even if the secured party fails to comply with this division or the requirements of any judicial proceeding. (c) Rights of other transferee.--If a transferee does not take free of the rights and interests described in subsection (a), the transferee takes the collateral subject to: (1) the debtor's rights in the collateral; (2) the security interest or agricultural lien under which the disposition is made; and (3) any other security interest or other lien.

13 Pa.C.S. § 9618 Rights and duties of certain secondary obligors.

(a) Rights and duties of secondary obligor.--A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor: (1) receives an assignment of a secured obligation from the secured party; (2) receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or (3) is subrogated to the rights of a secured party with respect to collateral. (b) Effect of assignment, transfer or subrogation.--An assignment, transfer or subrogation described in subsection (a): (1) is not a disposition of collateral under section 9610 (relating to disposition of collateral after default); and (2) relieves the secured party of further duties under this division.

13 Pa.C.S. § 9619 Transfer of record or legal title.

(a) Transfer statement.--As used in this section, the term "transfer statement" means a record signed by a secured party stating: (1) that the debtor has defaulted in connection with an obligation secured by specified collateral; (2) that the secured party has exercised its postdefault remedies with respect to the collateral; (3) that, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and (4) the name and mailing address of the secured party, debtor and transferee. (b) Effect of transfer statement.--A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration or certificate-of-title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall: (1) accept the transfer statement; (2) promptly amend its records to reflect the transfer; and (3) if applicable, issue a new appropriate certificate of title in the name of the transferee. (c) Transfer not a disposition; no relief of secured party's duties.--A transfer of the record or legal title to collateral to a secured party under subsection (b) or otherwise is not of itself a disposition of collateral under this division and does not of itself relieve the secured party of its duties under this division. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations.

13 Pa.C.S. § 9620 Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.

(a) Conditions to acceptance in satisfaction.--Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if all of the following paragraphs apply: (1) The debtor consents to the acceptance under subsection (c). (2) The secured party does not receive, within the time set forth in subsection (d), a notification of objection to the proposal signed by: (i) a person to which the secured party was required to send a proposal under section 9621 (relating to notification of proposal to accept collateral); or (ii) any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest which is the subject of the proposal. (3) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance. (4) Subsection (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 9624 (relating to waiver). (b) Purported acceptance ineffective.--A purported or apparent acceptance of collateral under this section is ineffective unless: (1) the secured party consents to the acceptance in a signed record or sends a proposal to the debtor; and (2) the conditions of subsection (a) are met. (c) Debtor's consent.--For purposes of this section: (1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default. (2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default or the secured party: (i) sends to the debtor after default a proposal which is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained; (ii) in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and (iii) does not receive a notification of objection signed by the debtor within 20 days after the proposal is sent. (d) Effectiveness of notification.--To be effective under subsection (a)(2), a notification of objection must be received by the secured party: (1) In the case of a person to which the proposal was sent pursuant to section 9621, within 20 days after notification was sent to that person. (2) In other cases: (i) within 20 days after the last notification was sent pursuant to section 9621; or (ii) if a notification was not sent, before the debtor consents to the acceptance under subsection (c). (e) Mandatory disposition of consumer goods.--A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 9610 (relating to disposition of collateral after default) within the time specified in subsection (f) if: (1) 60% of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or (2) 60% of the principal amount of the obligation secured has been paid in the case of a nonpurchase-money security interest in consumer goods. (f) Compliance with mandatory disposition requirement.--To comply with subsection (e), the secured party shall dispose of the collateral: (1) within 90 days after taking possession; or (2) within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and signed after default. (g) No partial satisfaction in consumer transaction.--In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsecs. (a), (b), (c) and (f). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9620 is referred to in sections 9102, 9408, 9602, 9624 of this title; section 5108 of Title 12 (Commerce and Trade).

13 Pa.C.S. § 9621 Notification of proposal to accept collateral.

(a) Persons to which proposal to be sent.--A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to all of the following: (1) Any person from which the secured party has received, before the debtor consented to the acceptance, a signed notification of a claim of an interest in the collateral. (2) Any other secured party or lienholder that, ten days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement which: (i) identified the collateral; (ii) was indexed under the debtor's name as of that date; and (iii) was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date. (3) Any other secured party that, ten days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in section 9311(a) (relating to security interest subject to other law). (b) Proposal to be sent to secondary obligor in partial satisfaction.--A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in subsection (a). (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsec. (a). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9621 is referred to in sections 9102, 9602, 9620 of this title.

13 Pa.C.S. § 9622 Effect of acceptance of collateral.

(a) Effect of acceptance.--A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures: (1) discharges the obligation to the extent consented to by the debtor; (2) transfers to the secured party all of a debtor's rights in the collateral; (3) discharges the security interest or agricultural lien which is the subject of the debtor's consent and any subordinate security interest or other subordinate lien; and (4) terminates any other subordinate interest. (b) Discharge of subordinate interest notwithstanding noncompliance.--A subordinate interest is discharged or terminated under subsection (a) even if the secured party fails to comply with this division. Cross References. Section 9622 is referred to in sections 9102, 9602, 9623 of this title.

13 Pa.C.S. § 9623 Right to redeem collateral.

(a) Persons that may redeem.--A debtor, any secondary obligor or any other secured party or lienholder may redeem collateral. (b) Requirements for redemption.--To redeem collateral, a person shall tender: (1) fulfillment of all obligations secured by the collateral; and (2) the reasonable expenses and attorney fees described in section 9615(a)(1) (relating to application of proceeds). (c) When redemption may occur.--A redemption may occur at any time before a secured party: (1) has collected collateral under section 9607 (relating to collection and enforcement by secured party); (2) has disposed of collateral or entered into a contract for its disposition under section 9610 (relating to disposition of collateral after default); or (3) has accepted collateral in full or partial satisfaction of the obligation it secures under section 9622 (relating to effect of acceptance of collateral). Cross References. Section 9623 is referred to in sections 9602, 9614, 9624 of this title; section 6259 of Title 12 (Commerce and Trade).

13 Pa.C.S. § 9624 Waiver.

(a) Waiver of disposition notification.--A debtor or secondary obligor may waive the right to notification of disposition of collateral under section 9611 (relating to notification before disposition of collateral) only by an agreement to that effect entered into and signed after default. (b) Waiver of mandatory disposition.--A debtor may waive the right to require disposition of collateral under section 9620(e) (relating to mandatory disposition of consumer goods) only by an agreement to that effect entered into and signed after default. (c) Waiver of redemption right.--Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under section 9623 (relating to right to redeem collateral) only by an agreement to that effect entered into and signed after default. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9624 is referred to in sections 9602, 9620 of this title; section 6259 of Title 12 (Commerce and Trade).

13 Pa.C.S. § 9625 Remedies for secured party's failure to comply with division.

(a) Judicial orders concerning noncompliance.--If it is established that a secured party is not proceeding in accordance with this division, a court may order or restrain collection, enforcement or disposition of collateral on appropriate terms and conditions. (b) Damages for noncompliance.--Subject to subsections (c), (d) and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with this division. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain or increased costs of alternative financing. (c) Persons entitled to recover damages; statutory damages in consumer-goods transaction.--Except as otherwise provided in section 9628 (relating to nonliability and limitation on liability of secured party; liability of secondary obligor): (1) a person that, at the time of the failure, was a debtor, was an obligor or held a security interest in or other lien on the collateral may recover damages under subsection (b) for its loss; and (2) if the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this chapter may recover for that failure in any event an amount not less than the credit service charge plus 10% of the principal amount of the obligation or the time price differential plus 10% of the cash price. (d) Recovery when deficiency eliminated or reduced.--A debtor whose deficiency is eliminated under section 9626 (relating to action in which deficiency or surplus is in issue) may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under section 9626 may not otherwise recover under subsection (b) for noncompliance with the provisions of this chapter relating to collection, enforcement, disposition or acceptance. (e) Statutory damages: noncompliance with specified provisions.--In addition to any damages recoverable under subsection (b), the debtor, consumer obligor or person named as a debtor in a filed record, as applicable, may recover $500 from a person that: (1) fails to comply with section 9208 (relating to additional duties of secured party having control of collateral); (2) fails to comply with section 9209 (relating to duties of secured party if account debtor has been notified of assignment); (3) files a record which the person is not entitled to file under section 9509(a) (relating to person entitled to file record); (4) fails to cause the secured party of record to file or send a termination statement as required by section 9513(a) or (c) (relating to termination statement); (5) fails to comply with section 9616(b)(1) (relating to explanation of calculation of surplus or deficiency), and the failure is part of a pattern or consistent with a practice of noncompliance; or (6) fails to comply with section 9616(b)(2). (f) Statutory damages: noncompliance with section 9210.--A debtor or consumer obligor may recover damages under subsection (b) and, in addition, $500 in each case from a person that, without reasonable cause, fails to comply with a request under section 9210. A recipient of a request under section 9210 which never claimed an interest in the collateral or obligations which are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection. (g) Limitation of security interest: noncompliance with section 9210.--If a secured party fails to comply with a request regarding a list of collateral or a statement of account under section 9210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure. Cross References. Section 9625 is referred to in sections 9518, 9602, 9628 of this title.

13 Pa.C.S. § 9626 Action in which deficiency or surplus is in issue.

(a) Applicable rules if amount of deficiency or surplus in issue.--In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply: (1) A secured party need not prove compliance with the provisions of this chapter relating to collection, enforcement, disposition or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue. (2) If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition or acceptance was conducted in accordance with this chapter. (3) Except as otherwise provided in section 9628 (relating to nonliability and limitation on liability of secured party; liability of secondary obligor), if a secured party fails to prove that the collection, enforcement, disposition or acceptance was conducted in accordance with the provisions of this chapter relating to collection, enforcement, disposition or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses and attorney fees exceeds the greater of: (i) the proceeds of the collection, enforcement, disposition or acceptance; or (ii) the amount of proceeds which would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this chapter relating to collection, enforcement, disposition or acceptance. (4) For purposes of paragraph (3)(ii), the amount of proceeds which would have been realized is equal to the sum of the secured obligation, expenses and attorney fees unless the secured party proves that the amount is less than that sum. (5) If a deficiency or surplus is calculated under section 9615(f) (relating to calculation of surplus or deficiency in disposition to person related to secured party), the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices which a complying disposition to a person other than the secured party, a person related to the secured party or a secondary obligor would have brought. (b) Nonconsumer transactions; no inference.--The limitation of the rules in subsection (a) to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions. The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches. Cross References. Section 9626 is referred to in sections 9602, 9625 of this title.

13 Pa.C.S. § 9627 Determination of whether conduct was commercially reasonable.

(a) Greater amount obtainable under other circumstances; no preclusion of commercial reasonableness.--The fact that a greater amount could have been obtained by a collection, enforcement, disposition or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition or acceptance was made in a commercially reasonable manner. (b) Dispositions which are commercially reasonable.--A disposition of collateral is made in a commercially reasonable manner if the disposition is made: (1) in the usual manner on any recognized market; (2) at the price current in any recognized market at the time of the disposition; or (3) otherwise in conformity with reasonable commercial practices among dealers in the type of property which was the subject of the disposition. (c) Approval by court or on behalf of creditors.--A collection, enforcement, disposition or acceptance is commercially reasonable if it has been approved: (1) in a judicial proceeding; (2) by a bona fide creditors' committee; (3) by a representative of creditors; or (4) by an assignee for the benefit of creditors. (d) Approval under subsection (c) not necessary; absence of approval has no effect.--Approval under subsection (c) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition or acceptance is not commercially reasonable.

13 Pa.C.S. § 9628 Nonliability and limitation on liability of secured party; liability of secondary obligor.

(a) Limitation of liability of secured party for noncompliance with division.--Subject to subsection (f), 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: (1) 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 division; and (2) the secured party's failure to comply with this division does not affect the liability of the person for a deficiency. (b) Limitation of liability based on status as secured party.--Subject to subsection (f), a secured party is not liable because of its status as secured party to any of the following: (1) A person that is a debtor or obligor unless the secured party knows: (i) that the person is a debtor or obligor; (ii) the identity of the person; and (iii) how to communicate with the person. (2) A secured party or lienholder that has filed a financing statement against a person unless the secured party knows: (i) that the person is a debtor; and (ii) the identity of the person. (c) Limitation of liability if reasonable belief that transaction not a consumer-goods transaction or consumer transaction.--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: (1) a debtor's representation concerning the purpose for which collateral was to be used, acquired or held; or (2) an obligor's representation concerning the purpose for which a secured obligation was incurred. (d) Limitation of liability for statutory damages.--A secured party is not liable to any person under section 9625(c)(2) (relating to remedies for secured party's failure to comply with division) for its failure to comply with section 9616 (relating to explanation of calculation of surplus or deficiency). (e) Limitation of multiple liability for statutory damages.--A secured party is not liable under section 9625(c)(2) more than once with respect to any one secured obligation. (f) Exception: limitation of liability under subsections (a) and (b) does not apply.--Subsections (a) and (b) 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: (1) the person is a debtor or obligor; and (2) the secured party knows that the information in subsection (b)(1) 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. (July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment. Act 41 amended subsecs. (a) and (b) and added subsec. (f). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References. Section 9628 is referred to in sections 9625, 9626 of this title.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=13Fetched: 10/16/2026