(1)        Subject to the provisions of N.C. Gen. Stat. § 25-2A-303, a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and except as provided in subsection (2) of this section and N.C. Gen. Stat. § 25-2A-511(4), takes subject to the existing lease contract. A lessee with a voidable leasehold interest has power to transfer a good leasehold interest to a good faith buyer for value or a good faith sublessee for value, but only to the extent set forth in the preceding sentence. When goods have been delivered under a transaction of lease, the lessee has that power even though:

(a)        the lessor was deceived as to the identity of the lessee;

(b)        the delivery was in exchange for a check which is later dishonored; or

(c)        the delivery was procured through fraud punishable as larcenous under the criminal law.

(2)        A buyer in the ordinary course of business or a sublessee in the ordinary course of business from a lessee who is a merchant dealing in goods of that kind to whom the goods were entrusted by the lessor obtains, to the extent of the interest transferred, all of the lessor’s and lessee’s rights to the goods, and takes free of the existing lease contract.

(3)        A buyer or sublessee from the lessee of goods that are subject to an existing lease contract and are covered by a certificate of title issued under a statute of this State or of another jurisdiction takes no greater rights than those provided both by this section and by the certificate of title statute. (1993, c. 463, s. 1; 1995, c. 509, s. 22.)

Terms Used In North Carolina General Statutes 25-2A-305

  • Contract: A legal written agreement that becomes binding when signed.
  • Fraud: Intentional deception resulting in injury to another.
  • Goods: means all things that are movable at the time of identification to the lease contract, or are fixtures (N. See North Carolina General Statutes 25-2A-103
  • 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.
  • Lease: means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. See North Carolina General Statutes 25-2A-103
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lease contract: means the total legal obligation that results from the lease agreement as affected by this Article and any other applicable rules of law. See North Carolina General Statutes 25-2A-103
  • Leasehold interest: means the interest of the lessor or the lessee under a lease contract. See North Carolina General Statutes 25-2A-103
  • Lessee: means a person who acquires the right to possession and use of goods under a lease. See North Carolina General Statutes 25-2A-103
  • Lessor: means a person who transfers the right to possession and use of goods under a lease. See North Carolina General Statutes 25-2A-103
  • state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories, so called; and the words "United States" shall be construed to include the said district and territories and all dependencies. See North Carolina General Statutes 12-3
  • Statute: A law passed by a legislature.
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