N.Y. U.C.C. Law § 9-608 — Application of Proceeds of Collection or Enforcement; Liability for Deficiency and Right to Surplus

Section 9--608. Application of Proceeds of Collection or Enforcement;

Liability for Deficiency and Right to Surplus.

(a) Application of proceeds, surplus, and deficiency if obligation secured. 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

9--607 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; and

(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 paragraph (1)(C).

(3) A secured party need not apply or pay over for application

noncash proceeds of collection and enforcement under Section

9--607 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 the obligor is liable for any deficiency.

(b) 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, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.