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La. R.S. 10:9-407

Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest

Acts 1988, No. 528, §1, eff

(a) Term restricting assignment generally ineffective. Except as otherwise provided in Subsection (b), a term in a lease is ineffective to the extent that it:

(1) prohibits, restricts, or requires the consent of a party to the lease to the creation, attachment, perfection, or enforcement of a security interest in an interest of a party under the lease or in the lessor's residual interest in the goods; or

(2) provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease.

(b) Effectiveness of certain terms. A term described in Subsection (a)(2) is effective to the extent that there is:

(1) a transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or

(2) a delegation of a material performance of either party to the lease in violation of the term.

(c) [Reserved.]

Official source: Louisiana State Legislature. Reproduced from public-domain Louisiana statutes; confirm against the official source for the current text. Not legal advice.