Colorado § 4-9-601 - Rights after default - judicial enforcement - consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes.

§ 4-9-601. Rights after default - judicial enforcement - consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes.

(a) After default, a secured party has the rights provided in this part 6 and, except as otherwise provided in section 4-9-602, those provided by agreement of the parties. A secured party:

(1) May reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure; and

(2) If the collateral is documents, may proceed either as to the documents or as to the goods they cover.

(b) A secured party in possession of collateral or control of collateral under section 4-7-106, 4-9-104, 4-9-105, 4-9-106, 4-9-107, or 4-9-107.5 has the rights and duties provided in section 4-9-207.

(c) The rights under subsections (a) and (b) of this section are cumulative and may be exercised simultaneously.

(d) Except as otherwise provided in subsection (g) of this section and section 4-9-605, after default, a debtor and an obligor have the rights provided in this part 6 and by agreement of the parties.

(e) If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of:

(1) The date of perfection of the security interest or agricultural lien in the collateral;

(2) The date of filing a financing statement covering the collateral; or

(3) Any date specified in a statute under which the agricultural lien was created.

(f) A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this article.

(g) Except as otherwise provided in section 4-9-607 (c), this part 6 imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.

(h) For purposes of this part 6, in taking possession of collateral by self-help, "breach of the peace" includes, but is not limited to, engaging in the following actions without the contemporaneous permission of the debtor:

(1) Entering a locked or unlocked residence or residential garage;

(2) Breaking, opening, or moving any lock, gate, or other barrier to enter enclosed real property; or

(3) Using or threatening to use violent means.

Source: L. 2001: Entire article R&RE, p. 1397, § 1, effective July 1. L. 2006: (b) amended, p. 503, § 44, effective September 1. L. 2023: (b) amended, (SB 23-090), ch. 136, p. 559, § 76, effective August 7.

Editor's note: (1) This section is similar to former § 4-9-501 as it existed prior to 2001.

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

ANNOTATION

Law reviews. For article, "The Revolution in Consumer Credit Legislation", see 45 Den. L.J. 679 (1968). For article, "Secured Transactions — Part I: Attachment, Perfection and Priorities", see 11 Colo. Law. 2939 (1982). For article, "Secured Transactions — Part II: Default, Foreclosure and Bankruptcy", see 12 Colo. Law. 13 (1983).

Annotator's note. Since § 4-9-601 is similar to § 4-9-501 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.

In an action to recover a deficiency judgment, the burden is upon the secured party to prove the amount of the deficiency. Cmty. Mgt. Ass'n of Colo. Springs, Inc. v. Tousley, 32 Colo. App. 33, 505 P.2d 1314 (1973).

A secured creditor need not "elect" his choice of remedies. He may pursue those methods of collection afforded under the code or through judicial processes otherwise available. Nor by effectuating the latter course of action does the creditor relinquish any rights obtained by virtue of his security interest. Bilar, Inc. v. Sherman, 40 Colo. App. 38, 572 P.2d 489 (1977).

Creditor is not required to make election of remedies, as rights and remedies of subsection (1) are cumulative. Wiley v. Bank of Fountain Valley, 632 P.2d 282 (Colo. App. 1981); Flexisystems, Inc. v. Am. Standards Testing Bureau, Inc., 847 P.2d 207 (Colo. App. 1992).

Creditor may proceed against real and personal property separately. Subsection (4) does not prohibit a creditor from proceeding against both real and personal property collateral simultaneously in separate proceedings. Wiley v. Bank of Fountain Valley, 632 P.2d 282 (Colo. App. 1981).

"Debtor" includes a guarantor and, as a debtor, the guarantor may not waive debtor's right to insist on a commercially reasonable disposition of collateral. May v. Women's Bank, N.A., 807 P.2d 1145 (Colo. 1991).

Section 4-9-504 is made inoperative by this section with respect to water stock foreclosed as a part of real estate security. Kinoshita v. North Denver Bank, 181 Colo. 183, 508 P.2d 1264 (1973).

Possession of chattels subject to security agreement. Secured party should have been granted immediate possession of chattels which were subject to the security agreement where the memorandum of agreement between the parties provided for foreclosure under the uniform commercial code. Alexander Dawson, Inc. v. Sage Creek Canyon Co., 37 Colo. App. 339, 546 P.2d 969 (1976).

A secured creditor who does not have possession of his security need not be granted a hearing before seizure of his security under a prior tax lien. Antonoff v. City & County of Denver, 195 Colo. 227, 577 P.2d 281 (1978).

Notice required under § 4-9-504 (3) may not be waived. United Bank v. Reed, 635 P.2d 922 (Colo. App. 1981).

Presumption that proceeds from sale without notice equal balance owing. Where there is no notice prior to sale of collateral, it is rebuttably presumed that the value of the collateral sold is equal to the balance owing on any notes. To rebut the presumption, the secured party has the burden of proving, by other evidence, the market value of the collateral and that, after application of that amount, there was a balance still owing on the notes. United Bank v. Reed, 635 P.2d 922 (Colo. App. 1981).

Applied in First Nat'l Bank v. Cillessen, 622 P.2d 598 (Colo. App. 1980); Hollemon v. Murray, 666 P.2d 1107 (Colo. App. 1982).