2007 Minnesota Statutes

336.9-207 MS 1998 [Repealed, 2000 c 399 art 1 s 140]
336.9-207 RIGHTS AND DUTIES OF SECURED PARTY HAVING POSSESSION OR
CONTROL OF COLLATERAL.
(a) Duty of care when secured party in possession. Except as otherwise provided in
subsection (d), a secured party shall use reasonable care in the custody and preservation
of collateral in the secured party's possession. In the case of chattel paper or an instrument,
reasonable care includes taking necessary steps to preserve rights against prior parties unless
otherwise agreed.
(b) Expenses, risks, duties, and rights when secured party in possession. Except as
otherwise provided in subsection (d), if a secured party has possession of collateral:
(1) reasonable expenses, including the cost of insurance and payment of taxes or other
charges incurred in the custody, preservation, use, or operation of the collateral are chargeable to
the debtor and are secured by the collateral;
(2) the risk of accidental loss or damage is on the debtor to the extent of a deficiency in
any effective insurance coverage;
(3) the secured party shall keep the collateral identifiable, but fungible collateral may be
commingled; and
(4) the secured party may use or operate the collateral:
(A) for the purpose of preserving the collateral or its value;
(B) as permitted by an order of a court having competent jurisdiction; or
(C) except in the case of consumer goods, in the manner and to the extent agreed by the
debtor.
(c) Duties and rights when secured party in possession or control. Except as otherwise
provided in subsection (d), a secured party having possession of collateral or control of collateral
under section 336.7-106, 336.9-104, 336.9-105, 336.9-106, or 336.9-107:
(1) may hold as additional security any proceeds, except money or funds, received from the
collateral;
(2) shall apply money or funds received from the collateral to reduce the secured obligation,
unless remitted to the debtor; and
(3) may create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured party is a buyer of accounts, chattel
paper, payment intangibles, or promissory notes or a consignor:
(1) subsection (a) does not apply unless the secured party is entitled under an agreement:
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against the debtor or a secondary obligor based on
the nonpayment or other default of an account debtor or other obligor on the collateral; and
(2) subsections (b) and (c) do not apply.
History: 2000 c 399 art 1 s 17; 2004 c 162 art 5 s 20