Colorado § 4-9-401 - Alienability of debtor's rights.

§ 4-9-401. Alienability of debtor's rights.

(a) Except as otherwise provided in subsection (b) of this section and sections 4-9-406, 4-9-407, 4-9-408, and 4-9-409, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this article.

(b) An agreement between the debtor and secured party which prohibits a transfer of the debtor's rights in collateral or makes the transfer a default does not prevent the transfer from taking effect.

(c) This section shall not be construed as being inconsistent with criminal sanctions now or hereafter applicable to transactions involving collateral or as justifying any transfer that would otherwise be a violation of law.

Source: L. 2001: Entire article R&RE, p. 1371, § 1, effective July 1.

Editor's note: (1) This section is similar to former § 4-9-311 as it existed prior to 2001.

(2) Colorado legislative change: Colorado added subsection (c).

ANNOTATION

Law reviews. For article, "Buyer-Secured Party Conflicts Under Section 9-307(1) of the Uniform Commercial Code", see 46 U. Colo. L. Rev. 333 (1974-75).

Annotator's note. Since § 4-9-401 is similar to § 4-9-311 as it existed prior to the 2001 repeal and reenactment of this article, relevant cases construing that provision have been included in the annotations to this section.

Section does not invalidate prior security interest. This section authorizes the physical transfer of collateral, but does not invalidate any prior security interest. Where the transfer is without the secured party's consent, and is a default under the agreement, the secured party can at that time call the note and take possession of the collateral. Layne v. Fort Carson Nat'l Bank, 655 P.2d 856 (Colo. App. 1982).

Section 4-9-306 and this section must be read together. This section does not invalidate the prior security interest under § 4-9-306 (2). Am. Heritage Bank & Trust Co. v. O. & E., Inc., 40 Colo. App. 306, 576 P.2d 566 (1978).

Bank's interest in collateral is not terminated by failure to participate in garnishment action, and its security interest follows the collateral. El Paso County Bank v. Charles R. Milisen & Co., 622 P.2d 594 (Colo. App. 1980).