1. (a) A secured party shall apply or pay over for application the cash proceeds of disposition in the following order to:
2. (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's fees and legal expenses incurred by the secured party;
3. (2) the satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;

4. (3) the satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:

   1. (A) 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
   2. (B) 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; and
5. (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.
6. (b) 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 paragraph (3) of subsection (a) of this section.
7. (c) A secured party need not apply or pay over for application noncash proceeds of disposition under this section 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.
8. (d) 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) of this section and permitted by subsection (c) of this section:
9. (1) unless paragraph (4) of subsection (a) of this section 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
10. (2) the obligor is liable for any deficiency.
11. (e) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:
12. (1) the debtor is not entitled to any surplus; and
13. (2) the obligor is not liable for any deficiency.
14. (f) The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this part to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if:
15. (1) the transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and
16. (2) the amount of proceeds of the disposition is significantly below the range of proceeds that 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.
17. (g) 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 that is not subordinate to the security interest or agricultural lien under which the disposition is made:
18. (1) takes the cash proceeds free of the security interest or other lien;
19. (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
20. (3) is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

Laws 2000, SB 1519, c. 371, § 122, eff. July 1, 2001.

Uniform Commercial Code Comments

The Uniform Commercial Code was developed by The American Law Institute and the National Conference of Commissioners on Uniform State Laws. These organizations hold the copyright on the official comments to the Uniform Commercial Code. The Oklahoma Supreme Court attempted but was unable to obtain permission to reproduce the Official Comments here. For more information on these organizations, click on the links above. To email your comments, click on one of the links below.

The American Law Institute
4025 Chestnut Street
Philadelphia, PA 19104
Phone: (215) 243-1600
FAX: (215) 243-1664
Email

National Conference of Commissioners on Uniform State Laws
676 N. St. Clair Street, Suite 1700
Chicago, Illinois 60611
(312) 915-0195
Email