(9-407) Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest
N.D. Cent. Code § 41-09-69
in effect41-09-69. (9-407) Restrictions on creation or enforcement of security interest in
leasehold interest or in lessor's residual interest.
1. Except as otherwise provided in subsection 2, a term in a lease agreement is
ineffective to the extent that the term:
a. Prohibits, restricts, or requires the consent of a party to the lease to the
assignment, transfer, creation, attachment, perfection, or enforcement of a
security interest in an interest of a party under the lease contract or in the lessor's
residual interest in the goods; or
b. Provides that the assignment, transfer, creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under
the lease.
2. Except as otherwise provided in subsection 6 of section 41-02.1-33, a term described
in subdivision b of subsection 1 is effective to the extent that there is:
a. A transfer by the lessee of the lessee's right of possession or use of the goods in
violation of the term; or
b. A delegation of a material performance of either party to the lease contract in
violation of the term.
3. The creation, attachment, perfection, or enforcement of a security interest in the
lessor's interest under the lease contract or the lessor's residual interest in the goods
is not a transfer that materially impairs the lessee's prospect of obtaining return
performance or materially changes the duty of or materially increases the burden or
risk imposed on the lessee within the purview of subsection 4 of section 41-02.1-33
unless, and then only to the extent that, enforcement actually results in a delegation of
material performance of the lessor.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://ndlegis.gov/cencode/t41c09.pdf#nameddest=41-09-69Fetched: 10/16/2026