Ark. Code Ann. » Title 4 Chapter 09
Arkansas Code Annotated

Ark. Code Ann. § 4-9-607 (2020)

Collection and enforcement by secured party

✓ Arkansas Code release r76: Acts through about 2020 (2021-2025 sessions missing)
Find cases: SyfertCases citing this section JustiaArk. Code CornellLII Search CasesGoogle Scholar
  1. If so agreed, and in any event after default, a secured party:
    1. may notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;
    2. may take any proceeds to which the secured party is entitled under § 4-9-315;
    3. may enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral;
    4. if it holds a security interest in a deposit account perfected by control under § 4-9-104(a)(1), may apply the balance of the deposit account to the obligation secured by the deposit account; and
    5. if it holds a security interest in a deposit account perfected by control under § 4-9-104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.
  2. If necessary to enable a secured party to exercise under subsection (a)(3) the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded:
    1. a copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and
    2. the secured party's sworn affidavit in recordable form stating that:
      1. a default has occurred with respect to the obligation secured by the mortgage; and
      2. the secured party is entitled to enforce the mortgage nonjudicially.
  3. A secured party shall proceed in a commercially reasonable manner if the secured party:
    1. undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and
    2. is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.
  4. A secured party may deduct from the collections made pursuant to subsection (c) reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party.
  5. This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

History. Acts 2001, No. 1439, § 1; 2013, No. 138, § 22.

Amendments. The 2013 amendment inserted “with respect to the obligation secured by the mortgage” in (b)(2)(A).

Research References

Ark. L. Notes.

Laurence, Update: Some Practical Advice on How to Create a Security Interest in a Deposit Account, 2002 Arkansas L. Notes 45.

Case Notes

Assignment.

“Assignment” language held to provide means of perfecting security interest in accounts receivable under the pre-2001 version of this chapter. Northwest Nat'l Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 25 Ark. App. 279, 757 S.W.2d 182 (1988) (decision under prior law).

Costs.

The commercially reasonable and proper costs incurred by a secured creditor in reducing the collateral to possession and holding it and preparing it for sale were proper deductions from the proceeds of sale in arriving at the credit to be given on the debt evidenced by the note; the agreement of the accommodation maker was not required under the pre-2001 version of this chapter. Svestka v. First Nat'l Bank, 269 Ark. 237, 602 S.W.2d 604 (1980) (decision under prior law).

The allowance to a secured party of the expenses of preparing for sale personalty which is held as collateral, after default, including the costs of repairs reasonably necessary, is not error; accordingly, where a secured bank purchased insurance coverage on an airplane which was held as collateral, pending the sale of the plane, the cost of the insurance was an allowable expense and was commercially reasonable as affording protection, both to the bank and to the accommodation party under the pre-2001 version of this chapter, since loss or destruction of, or damage to, the plane would have deprived the accommodation party of credit for the proceeds from the plane which he might reasonably expect. Svestka v. First Nat'l Bank, 269 Ark. 237, 602 S.W.2d 604 (1980) (decision under prior law).

Cited: First State Bank v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987) (decision under prior law).