§ 25-9-620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.
§25‑9‑620. Acceptance of collateral in full or partial satisfactionof obligation; compulsory disposition of collateral.
(a) Conditions toacceptance in satisfaction. Except as otherwise provided in subsection (g) ofthis section, a secured party may accept collateral in full or partialsatisfaction of the obligation it secures only if:
(1) The debtor consentsto the acceptance under subsection (c) of this section;
(2) The secured partydoes not receive, within the time set forth in subsection (d) of this section,a notification of objection to the proposal authenticated by:
a. A person to whichthe secured party was required to send a proposal under G.S. 25‑9‑621;or
b. Any other person,other than the debtor, holding an interest in the collateral subordinate to thesecurity interest that is the subject of the proposal;
(3) If the collateral isconsumer goods, the collateral is not in the possession of the debtor when thedebtor consents to the acceptance; and
(4) Subsection (e) ofthis section does not require the secured party to dispose of the collateral orthe debtor waives the requirement pursuant to G.S. 25‑9‑624.
(b) Purportedacceptance ineffective. A purported or apparent acceptance of collateralunder this section is ineffective unless:
(1) The secured partyconsents to the acceptance in an authenticated record or sends a proposal tothe debtor; and
(2) The conditions ofsubsection (a) of this section are met.
(c) Debtor's consent. For purposes of this section:
(1) A debtor consents toan acceptance of collateral in partial satisfaction of the obligation itsecures only if the debtor agrees to the terms of the acceptance in a recordauthenticated after default; and
(2) A debtor consents toan acceptance of collateral in full satisfaction of the obligation it securesonly if the debtor agrees to the terms of the acceptance in a recordauthenticated after default or the secured party:
a. Sends to the debtorafter default a proposal that is unconditional or subject only to a conditionthat collateral not in the possession of the secured party be preserved ormaintained;
b. In the proposal,proposes to accept collateral in full satisfaction of the obligation itsecures; and
c. Does not receive anotification of objection authenticated by the debtor within 20 days after theproposal is sent.
(d) Effectiveness ofnotification. To be effective under subdivision (a)(2) of this section, anotification of objection must be received by the secured party:
(1) In the case of aperson to which the proposal was sent pursuant to G.S. 25‑9‑621,within 20 days after notification was sent to that person; and
(2) In other cases:
a. Within 20 days afterthe last notification was sent pursuant to G.S. 25‑9‑621; or
b. If a notificationwas not sent, before the debtor consents to the acceptance under subsection (c)of this section.
(e) Mandatorydisposition of consumer goods. A secured party that has taken possession ofcollateral shall dispose of the collateral pursuant to G.S. 25‑9‑610within the time specified in subsection (f) of this section if:
(1) Sixty percent (60%)of the cash price has been paid in the case of a purchase‑money securityinterest in consumer goods; or
(2) Sixty percent (60%)of the principal amount of the obligation secured has been paid in the case ofa non‑purchase‑money security interest in consumer goods.
(f) Compliance withmandatory disposition requirement. To comply with subsection (e) of thissection, the secured party shall dispose of the collateral:
(1) Within 90 days aftertaking possession; or
(2) Within any longerperiod to which the debtor and all secondary obligors have agreed in anagreement to that effect entered into and authenticated after default.
(g) No partialsatisfaction in consumer transaction. In a consumer transaction, a securedparty may not accept collateral in partial satisfaction of the obligation itsecures. (1965, c. 700, s. 1; 1975, c. 862, s. 7; 2000‑169,s. 1.)