Colorado § 4-2.5-527 - Lessor's rights to dispose of goods.

§ 4-2.5-527. Lessor's rights to dispose of goods.

(1) After a default by a lessee under the lease contract of the type described in section 4-2.5-523 (1) or 4-2.5-523 (3)(a) or after the lessor refuses to deliver or takes possession of goods (section 4-2.5-525 or 4-2.5-526), or if agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance thereof by lease, sale, or otherwise.

(2) Except as otherwise provided with respect to damages liquidated in the lease agreement (section 4-2.5-504) or otherwise determined pursuant to agreement of the parties (sections 4-1-302 and 4-2.5-503), if the disposition is by lease agreement substantially similar to the original lease agreement and the lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the lessee as damages (i) accrued and unpaid rent as of the date of the commencement of the term of the new lease agreement, (ii) the present value, as of the same date, of the total rent for the then remaining lease term of the original lease agreement minus the present value, as of the same date, of the rent under the new lease agreement applicable to that period of the new lease term that is comparable to the then remaining term of the original lease agreement, (iii) interest on the amount computed under clause (ii) of this subsection (2) from the date of the commencement of the term of the new lease agreement until the date of entry of judgment at the same rate used in computing present value, and (iv) any incidental damages allowed under section 4-2.5-530, less expenses saved in consequence of the lessee's default.

(3) If the lessor's disposition is by lease agreement that for any reason does not qualify for treatment under subsection (2) of this section, or is by sale or otherwise, the lessor may recover from the lessee as if the lessor had elected not to dispose of the goods and section 4-2.5-528 governs.

(4) A subsequent buyer or lessee who buys or leases from the lessor in good faith for value as a result of a disposition under this section takes the goods free of the original lease contract and any rights of the original lessee even though the lessor fails to comply with one or more of the requirements of this article.

(5) The lessor is not accountable to the lessee for any profit made on any disposition. A lessee who has rightfully rejected or justifiably revoked acceptance shall account to the lessor for any excess over the amount of the lessee's security interest (section 4-2.5-508 (5)).

Source: L. 91: Entire article added, p. 315, § 1, effective July 1, 1992. L. 2006: (2) amended, p. 495, § 22, effective September 1.

Editor's note - Colorado legislative change. In subsection (2) of this section, after the words "term of the original lease agreement,", Colorado inserted a new clause as follows: "(iii) interest on the amount computed under clause (ii) of this subsection (2) from the date of the commencement of the term of the new lease agreement until the date of entry of judgment at the same rate used in computing present value,". The third clause was then relettered as clause "(iv)".