Colorado § 4-9-609 - Secured party's right to take possession after default.

§ 4-9-609. Secured party's right to take possession after default.

(a) After default, a secured party:

(1) May take possession of the collateral; and

(2) Without removal, may render equipment unusable and dispose of collateral on a debtor's premises under section 4-9-610.

(b) A secured party may proceed under subsection (a) of this section:

(1) Pursuant to judicial process; or

(2) Without judicial process, if it proceeds without breach of the peace.

(c) If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.

(d) If the collateral is a manufactured home, as defined in section 42-1-102 (48.8), or a trailer coach, as defined in section 42-1-102 (106), and is used and occupied by the debtor as a place of residence, the secured party may take possession of the collateral pursuant to this section without judicial process only if there is clear and convincing evidence that the debtor has vacated or abandoned the collateral or the debtor voluntarily surrenders the collateral to the secured party.

(e) In exercising its rights under paragraph (2) of subsection (a) of this section with respect to collateral, a secured party may not disable or render unusable any computer program or other similar device embedded in the collateral if immediate injury to any person or property is a reasonably foreseeable consequence of such action. Any secured party who disables or renders unusable such a computer program or other similar device in such circumstances shall be liable in accordance with applicable rules of law to any person who sustains an injury to person or property as a reasonably foreseeable result of the secured party's action.

Source: L. 2001: Entire article R&RE, p. 1403, § 1, effective July 1. L. 2022: (d) amended, (SB 22-212), ch. 421, p. 2965, § 11, effective August 10.

Editor's note: (1) This section is similar to former § 4-9-503 as it existed prior to 2001.

(2) Colorado legislative change: Colorado added subsections (d) and (e).

ANNOTATION

Annotator's note. Since § 4-9-609 is similar to § 4-9-503 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.

Law reviews. For comment discussing 14th amendment "state action" ramifications and constitutionality of self-help repossessions under the U.C.C., see 44 U. Colo. L. Rev. 389 (1973). For comment discussing whether repossession by a secured creditor pursuant to statutory and contractual provisions constitutes state action, see 50 Den. L.J. 261 (1973). 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). For article, "Secured Transactions — Part II: Default, Foreclosure and Bankruptcy", see 12 Colo. Law. 13 (1983). For article, "A Review of Agricultural Law: Hard Times and Hard Choices", see 15 Colo. Law. 629 (1986). For article, "The Colorado Farm Homestead Protection Act", see 15 Colo. Law 1642 (1986). For article, "Agricultural Lending in a Troubled Economy", see 16 Colo. Law. 1773 (1987). For article, "The Agricultural Credit Act of 1987", see 17 Colo. Law. 611 (1988).

As applied to facts of case section not unconstitutional. Where the secured creditor gave the debtor every opportunity to avoid default, and only after the debtor refused to make any effort to pay and he was informed by the creditor that the creditor had no choice but to repossess, did the creditor resort to repossession, as applied to these facts, this section is not unconstitutional for violating due process. John Deere Co. v. Catalano, 186 Colo. 101, 525 P.2d 1153 (1974).

Authorization of self-help repossessions is not enough to sufficiently involve the state in the acts of repossessors for their acts to be action "under color of" state law. Kirksey v. Theilig, 351 F. Supp. 727 (D. Colo. 1972).

Article 9 does not determine location of title after default. People ex rel. VanMeveren v. District Court, 619 P.2d 494 (Colo. 1980).

Traditional state rule allows repossession of security. In Colorado, as elsewhere, the state's traditional rule has been to allow the secured creditor to repossess the security if the contract so provides and the repossession does not "breach the peace". John Deere Co. v. Catalano, 186 Colo. 101, 525 P.2d 1153 (1974).

Right to possession is not limited by this section to the creditor whose security interest has the higher priority. Western Nat'l Bank v. ABC Drilling Co., 42 Colo. App. 407, 599 P.2d 942 (1979).

Section adds nothing if parties previously agree on such remedy. While the enactment of this section provides for self-help repossession in absence of contrary contract provisions, it adds nothing to the situation where the parties have previously agreed on such a remedy and the procedure is carried out without significant state help. John Deere Co. v. Catalano, 186 Colo. 101, 525 P.2d 1153 (1974).

No right to jury trial before repossession. Although C.R.C.P. 38 provides that a party is entitled to a jury trial upon demand in an action for the recovery of specific real or personal property, the rule is not intended to extend to actions involving the repossession of collateral by a secured party. Western Nat'l Bank v. ABC Drilling Co., 42 Colo. App. 407, 599 P.2d 942 (1979).

In event of default, voluntary delivery of collateral to creditor constitutes a repossession and does not remove the matter from the UCC. Tajalli v. Gharibi, 758 P.2d 190 (Colo. App. 1988).

Applied in First Nat'l Bank v. District Court, 653 P.2d 1123 (Colo. 1982); Layne v. Fort Carson Nat'l Bank, 655 P.2d 856 (Colo. App. 1982); Wynn v. Adams County Bank, 761 P.2d 234 (Colo. App. 1988).