Arizona § 47-9620 - Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral

§ 47-9620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral

A. Except as otherwise provided in subsection G of this section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

1. The debtor consents to the acceptance under subsection C of this section;

2. The secured party does not receive, within the time set forth in subsection D of this section, a notification of objection to the proposal authenticated by:

(a) A person to which the secured party was required to send a proposal under section 47-9621; or

(b) Any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;

3. If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and

4. Subsection E of this section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 47-9624.

B. A purported or apparent acceptance of collateral under this section is ineffective unless:

1. The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and

2. The conditions of subsection A of this section are met.

C. For purposes of this section:

1. A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and

2. A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:

(a) Sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;

(b) In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

(c) Does not receive a notification of objection authenticated by the debtor within twenty days after the proposal is sent.

D. To be effective under subsection A, paragraph 2 of this section, a notification of objection must be received by the secured party:

1. In the case of a person to which the proposal was sent pursuant to section 47-9621, within twenty days after notification was sent to that person; and

2. In other cases:

(a) Within twenty days after the last notification was sent pursuant to section 47-9621; or

(b) If a notification was not sent, before the debtor consents to the acceptance under subsection C of this section.

E. A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 47-9610 within the time specified in subsection F of this section if:

1. Sixty per cent of the cash price has been paid in the case of a purchase money security interest in consumer goods; or

2. Sixty per cent of the principal amount of the obligation secured has been paid in the case of a nonpurchase money security interest in consumer goods.

F. To comply with subsection E of this section, the secured party shall dispose of the collateral:

1. Within ninety days after taking possession; or

2. Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

G. In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.