Colorado Code
Part 6 - Default
§ 4-9-620. Acceptance of Collateral in Full or Partial Satisfaction of Obligation - Compulsory Disposition of Collateral

(1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and
(2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:
(A) Sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;
(B) In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

(1) In the case of a person to which the proposal was sent pursuant to section 4-9-621, within twenty days after notification was sent to that person; and
(2) In other cases:
(A) Within twenty days after the last notification was sent pursuant to section 4-9-621; or
(B) If a notification was not sent, before the debtor consents to the acceptance under subsection (c) of this section.

(1) Sixty percent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or
(2) Sixty percent of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.

(1) Within ninety days after taking possession; or
(2) Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

Source: L. 2001: Entire article R&RE, p. 1414, § 1, effective July 1.
Editor's note: This section is similar to former § 4-9-505 as it existed prior to 2001.

Subsection (a) sets forth the conditions necessary to an effective acceptance (formerly, retention) of collateral in full or partial satisfaction of the secured obligation. Section 9-621 requires in addition that a secured party who wishes to proceed under this section notify certain other persons who have or claim to have an interest in the collateral. Unlike the failure to meet the conditions in subsection (a), under Section 9-622(b) the failure to comply with the notification requirement of Section 9-621 does not render the acceptance of collateral ineffective. Rather, the acceptance can take effect notwithstanding the secured party's noncompliance. A person to whom the required notice was not sent has the right to recover damages under Section 9-625(b). Section 9-622(a) sets forth the effect of an acceptance of collateral.
The time when a debtor consents to a strict foreclosure is significant in several circumstances under this section and the following one. See Sections 9-620(a)(1), (d)(2), 9-621(a)(1), (a)(2), (a)(3). For purposes of determining the time of consent, a debtor's conditional consent constitutes consent.
Subsection (a)(2) contains the second condition to the effectiveness of an acceptance under this section the absence of a timely objection from a person holding a junior interest in the collateral or from a secondary obligor. Any junior party secured party or lienholder is entitled to lodge an objection to a proposal, even if that person was not entitled to notification under Section 9-621. Subsection (d), discussed below, indicates when an objection is timely.
Subsections (a)(3) and (a)(4) contain special rules for transactions in which consumers are involved. See Comment 12.
Subsection (g) prohibits the secured party in consumer transactions from accepting collateral in partial satisfaction of the obligation it secures. If a secured party attempts an acceptance in partial satisfaction in a consumer transaction, the attempted acceptance is void.