57-26-114 - Turnover of rents -- Commingling and identifiability of rents -- Liability of assignor.
57-26-114. Turnover of rents -- Commingling and identifiability of rents --Liability of assignor.
(1) In this section, "good faith" means honesty in fact and the observance of reasonablecommercial standards of fair dealing.
(2) If an assignor collects rents that the assignee is entitled to collect under this chapter:
(a) the assignor shall turn over the proceeds to the assignee, less any amount representingpayment of expenses authorized by the assignee; and
(b) the assignee continues to have a security interest in the proceeds so long as they areidentifiable.
(3) For purposes of this chapter, cash proceeds are identifiable if they are maintained in asegregated account or, if commingled with other funds, to the extent the assignee can identifythem by a method of tracing, including application of equitable principles, that is permitted underlaw of this state other than this chapter with respect to commingled funds.
(4) In addition to any other remedy available to the assignee under law of this state otherthan this chapter, if an assignor fails to turn over proceeds to the assignee as required bySubsection (2), the assignee may recover from the assignor in a civil action:
(a) the proceeds, or an amount equal to the proceeds, that the assignor was obligated toturn over under Subsection (2); and
(b) reasonable attorney fees and costs incurred by the assignee to the extent provided forby agreement and not prohibited by law of this state other than this chapter.
(5) The assignee may maintain an action under Subsection (4) without bringing an actionto foreclose any security interest that it may have in the real property. Any sums recovered in theaction must be applied in the manner specified in Section 57-26-112.
(6) Unless otherwise agreed, if an assignee entitled to priority under Subsection57-26-105(3) enforces its interest in rents after another creditor holding a subordinate securityinterest in rents has enforced its interest under Section 57-26-108 or 57-26-109, the creditorholding the subordinate security interest in rents is not obligated to turn over any proceeds that itcollects in good faith before the creditor receives notification that the senior assignee hasenforced its interest in rents. The creditor shall turn over to the senior assignee any proceeds thatit collects after it receives the notification.
Enacted by Chapter 139, 2009 General Session