2006 Minnesota Statutes

336.9-608 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 336.9-607 in the following order to:
(A) the reasonable expenses of collection and enforcement and, to the extent provided for
by agreement and not prohibited by law, reasonable attorneys fees and legal expenses incurred
by the secured party;
(B) the satisfaction of obligations secured by the security interest or agricultural lien under
which the collection or enforcement is made; and
(C) 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 an authenticated 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)(C).
(3) A secured party need not apply or pay over for application noncash proceeds of collection
and enforcement under section 336.9-607 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.
History: 2000 c 399 art 1 s 109