A. Except as otherwise provided in subsection D of this section, 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.

Terms Used In Arizona Laws 47-9207

  • Account debtor: means a person obligated on an account, chattel paper or general intangible but does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper. See Arizona Laws 47-9102
  • Chattel paper: means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods or a lease of specific goods and license of software used in the goods. See Arizona Laws 47-9102
  • Collateral: means the property subject to a security interest or agricultural lien. See Arizona Laws 47-9102
  • Consignor: means a person that delivers goods to a consignee in a consignment. See Arizona Laws 47-9102
  • Consumer goods: means goods that are used or bought for use primarily for personal, family or household purposes. See Arizona Laws 47-9102
  • Debtor: means :

    (a) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;

    (b) A seller of accounts, chattel paper, payment intangibles or promissory notes; or

    (c) A consignee. See Arizona Laws 47-9102

  • including: means not limited to and is not a term of exclusion. See Arizona Laws 1-215
  • Instrument: means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease and is of a type that in the ordinary course of business is transferred by delivery with any necessary indorsement or assignment. See Arizona Laws 47-9102
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Obligor: means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, owes payment or other performance of the obligation, has provided property other than the collateral to secure payment or other performance of the obligation or is otherwise accountable in whole or in part for payment or other performance of the obligation. See Arizona Laws 47-9102
  • Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
  • Secured party: means :

    (a) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

    (b) A person that holds an agricultural lien;

    (c) A consignor;

    (d) A person to which accounts, chattel paper, payment intangibles or promissory notes have been sold;

    (e) A trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or

    (f) A person that holds a security interest arising under section 47-2401, 47-2505, 47-2711, 47-2A508, 47-4210 or 47-5118. See Arizona Laws 47-9102

B. Except as otherwise provided in subsection D of this section, 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. Except as otherwise provided in subsection D of this section, a secured party having possession of collateral or control of collateral under section 47-7106, 47-9104, 47-9105, 47-9106 or 47-9107:

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. If the secured party is a buyer of accounts, chattel paper, payment intangibles or promissory notes or a consignor:

1. Subsection A of this section 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 of this section do not apply.

 

  Previous section
Next section  
 Article 2 Contents