§ 9615. Application of proceeds of disposition; liability for
deficiency and right to surplus.
(a) Application of proceeds.--A secured party shall apply or pay over for application the cash proceeds of disposition under section 9610 (relating to disposition of collateral after default) in the following order to:
(1) The reasonable expenses of retaking, holding, preparing for disposition, processing and disposing and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party.
(2) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made.
(3) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:
(i) the secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and
(ii) in a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor.
(4) A secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.
(b) Proof of subordinate interest.--If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under subsection (a)(3).
(c) Application of noncash proceeds.--A secured party need not apply or pay over for application noncash proceeds of disposition under section 9610 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
(d) Surplus or deficiency if obligation secured.--If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subsection (a) and permitted by subsection (c):
(1) unless subsection (a)(4) requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and
(2) the obligor is liable for any deficiency.
(e) No surplus or deficiency in sales of certain rights to payment.--If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes:
(1) the debtor is not entitled to any surplus; and
(2) the obligor is not liable for any deficiency.
(f) Calculation of surplus or deficiency in disposition to person related to secured party.--The surplus or deficiency following a disposition is calculated based on the amount of proceeds which would have been realized in a disposition complying with this chapter to a transferee other than the secured party, a person related to the secured party or a secondary obligor if:
(1) the transferee in the disposition is the secured party, a person related to the secured party or a secondary obligor; and
(2) the amount of proceeds of the disposition is significantly below the range of proceeds which a complying disposition to a person other than the secured party, a person related to the secured party or a secondary obligor would have brought.
(g) Cash proceeds received by junior secured party.--A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien which is not subordinate to the security interest or agricultural lien under which the disposition is made:
(1) takes the cash proceeds free of the security interest or other lien;
(2) is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and
(3) is not obligated to account to or pay the holder of the security interest or other lien for any surplus.
Cross References. Section 9615 is referred to in sections 9602, 9616, 9623, 9626 of this title.
Structure Pennsylvania Consolidated & Unconsolidated Statutes
Pennsylvania Consolidated & Unconsolidated Statutes
Section 9602 - Waiver and variance of rights and duties
Section 9603 - Agreement on standards concerning rights and duties
Section 9604 - Procedure if security agreement covers real property or fixtures
Section 9605 - Unknown debtor or secondary obligor
Section 9606 - Time of default for agricultural lien
Section 9607 - Collection and enforcement by secured party
Section 9609 - Secured party's right to take possession after default
Section 9610 - Disposition of collateral after default
Section 9611 - Notification before disposition of collateral
Section 9612 - Timeliness of notification before disposition of collateral
Section 9613 - Contents and form of notification before disposition of collateral: general
Section 9615 - Application of proceeds of disposition; liability for deficiency and right to surplus
Section 9616 - Explanation of calculation of surplus or deficiency
Section 9617 - Rights of transferee of collateral
Section 9618 - Rights and duties of certain secondary obligors
Section 9619 - Transfer of record or legal title
Section 9621 - Notification of proposal to accept collateral
Section 9622 - Effect of acceptance of collateral
Section 9623 - Right to redeem collateral
Section 9625 - Remedies for secured party's failure to comply with division
Section 9626 - Action in which deficiency or surplus is in issue
Section 9627 - Determination of whether conduct was commercially reasonable