N.D. Cent. Code § 41-09-17
(9-207) Rights and duties of secured party having possession or control of collateral
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) Except as otherwise provided in subsection 4, 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.
(1) Except as otherwise provided in subsection 4, 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.
(2) Except as otherwise provided in subsection 4, if a secured party has possession of collateral: 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) Except as otherwise provided in subsection 4, if a secured party has possession of collateral: 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;
(3) The risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage;
(3) The risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage;
(4) The secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and
(4) The secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and
(5) The secured party may use or operate the collateral: For the purpose of preserving the collateral or the collateral’s value;
(5) The secured party may use or operate the collateral: For the purpose of preserving the collateral or the collateral’s value;
(6) As permitted by an order of a court having competent jurisdiction; or
(6) As permitted by an order of a court having competent jurisdiction; or
(7) Except in the case of consumer goods, in the manner and to the extent agreed by the debtor.
(7) Except in the case of consumer goods, in the manner and to the extent agreed by the debtor.
(8) Except as otherwise provided in subsection 4, a secured party having possession of collateral or control of collateral under section 41-07-06, 41-09-04, 41-09-05, 41-09-06, or 41-09-07: May hold as additional security any proceeds, except money or funds, received from the collateral;
(8) Except as otherwise provided in subsection 4, a secured party having possession of collateral or control of collateral under section 41-07-06, 41-09-04, 41-09-05, 41-09-06, or 41-09-07: May hold as additional security any proceeds, except money or funds, received from the collateral;
(9) Shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor; and
(9) Shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor; and
(10) May create a security interest in the collateral.
(10) May create a security interest in the collateral.
(11) If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor: Subsection 1 does not apply unless the secured party is entitled under an agreement: To charge back uncollected collateral; or
(11) If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor: Subsection 1 does not apply unless the secured party is entitled under an agreement: To charge back uncollected collateral; or
(12) 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
(12) 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
(13) Subsections 2 and 3 do not apply.
(13) Subsections 2 and 3 do not apply.
(14) “Repledges” and Right of Redemption. Subsection (c)(3) eliminates the qualification in former Section 9-207 to the effect that the terms of a “repledge” may not “impair” a debtor’s “right to redeem” collateral. The change is primarily for clarification. There is no basis on which to draw from subsection (c)(3) any inference concerning the debtor’s right to redeem the collateral. The debtor enjoys that right under Section 9-623; this section need not address it. For example, if the collateral is a negotiable note that the secured party (SP-1) repledges to SP-2, nothing in this section suggests that the debtor (D) does not retain the right to redeem the note upon payment to SP-1 of all obligations secured by the note. But, as explained below, the debtor’s unimpaired right to redeem as against the debtor’s original secured party nevertheless may not be enforceable as against the new secured party.
(15) “Repledges” of Investment Property. The following example will aid the discussion of “repledges” of investment property.
(16) Buyers of Chattel Paper and Other Receivables; Consignors. This section has been revised to reflect the fact that a seller of accounts, chattel paper, payment intangibles, or promissory notes retains no interest in the collateral and so is not disadvantaged by the secured party’s noncompliance with the requirements of this section. Accordingly, subsection (d) provides that subsection (a) applies only to security interests that secure an obligation and to sales of receivables in which the buyer has recourse against the debtor. (Of course, a buyer of accounts or payment intangibles could not have “possession” of original collateral, but might have possession of proceeds, such as promissory notes or checks.) The meaning of “recourse” in this respect is limited to recourse arising out of the account debtor’s failure to pay or other default.
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.