Com. Code, § 9608 · Chapter 6. Default
Com. Code, § 9608
Text — As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
(a) If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:
(1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under Section 9607 in the following order to:
(A) The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney’s fees and legal expenses incurred by the secured party.
(B) The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made.
(C) The satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives a signed demand for proceeds before distribution of the proceeds is completed.
(2) 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 complies, the secured party need not comply with the holder’s demand under subparagraph (C) of paragraph (1).
(3) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under Section 9607 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.
(4) A secured party shall account to and pay a debtor for any surplus, and except as otherwise provided in subdivision (b) of Section 9626, the obligor is liable for any deficiency.
(b) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency. Subdivision (b) of Section 701.040 of the Code of Civil Procedure relating to the payment of proceeds applies only if the security agreement provides that the debtor is entitled to any surplus.
Notes and commentary — not statutory text
History
Amended by Stats. 2023, Ch. 210, Sec. 63. (SB 95) Effective January 1, 2024.
Source of truth
- Edition
- As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
- Official file
- https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=COM§ionNum=9608.
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- sha256 513cf422798a98725f2cb5120150f37620b7aed57a2535f96db1d8831d9e1066
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- compose_ca.py 2026-10-22: the Legislative Counsel's CAML content files read by a tokenizer (caml_readers.reader_a); an independent xml.etree reading (caml_readers.reader_b) agrees on every section
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Commercial Code
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