Montana Code Annotated
Part 4. Rights of Third Parties
30-9A-407. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest

30-9A-407. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest. (1) Except as otherwise provided in subsection (2), a term in a lease agreement is ineffective to the extent that it:
(a) prohibits, restricts, or requires the consent of a party to the lease to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, an interest of a party under the lease contract or in the lessor's residual interest in the goods; or
(b) 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.
(2) Except as otherwise provided in 30-2A-303(7), a term described in subsection (1)(b) is effective to the extent that there is:
(a) a transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or
(b) a delegation of a material performance of either party to the lease contract in violation of the term.
(3) The creation, attachment, perfection, or enforcement of a security interest in the lessor's interest under the lease contract or the lessor's residual interest in the goods is not a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on the lessee within 30-2A-303(4). This subsection does not apply to the extent that enforcement results in a delegation of a material performance of the lessor.
History: En. Sec. 68, Ch. 305, L. 1999; amd. Sec. 13, Ch. 179, L. 2001; Sec. 30-9-447, MCA 1999; redes. 30-9A-407 by Code Commissioner, 2001.

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