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Illinois Compiled Statutes

810 ILCS 5/9-207 (2026)

Rights and duties of secured party having possession or control of collateral

✓ current as of May 2026
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(810 ILCS 5/9-207) (from Ch. 26, par. 9-207)
    Sec. 9-207. Rights and duties of secured party having possession or control of collateral.
    (a) Duty of care when secured party in possession. Except as otherwise provided in subsection (d), a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.
    (b) Expenses, risks, duties, and rights when secured party in possession. Except as otherwise provided in subsection (d), if a secured party has possession of collateral:
        (1) reasonable expenses, including the cost of
    
insurance and payment of taxes or other charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to the debtor and are secured by the collateral;
        (2) the risk of accidental loss or damage is on the
    
debtor to the extent of a deficiency in any effective insurance coverage;
        (3) the secured party shall keep the collateral
    
identifiable, but fungible collateral may be commingled; and
        (4) the secured party may use or operate the
    
collateral:
            (A) for the purpose of preserving the collateral
        
or its value;
            (B) as permitted by an order of a court having
        
competent jurisdiction; or
            (C) except in the case of consumer goods, in the
        
manner and to the extent agreed by the debtor.
    (c) Duties and rights when secured party in possession or control. Except as otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under Section 7-106, 9-104, 9-105, 9-105A, 9-106, 9-107, or 9-107A:
        (1) may hold as additional security any proceeds,
    
except money or funds, received from the collateral;
        (2) shall apply money or funds received from the
    
collateral to reduce the secured obligation, unless remitted to the debtor; and
        (3) may create a security interest in the collateral.
    (d) Buyer of certain rights to payment. If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor:
        (1) subsection (a) does not apply unless the secured
    
party is entitled under an agreement:
            (A) to charge back uncollected collateral; or
            (B) otherwise to full or limited recourse against
        
the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and
        (2) subsections (b) and (c) do not apply.
(Source: P.A. 103-1036, eff. 1-1-25.)

    
Notes of Decisions
Cited in 6 cases (1 in the last 5 years), 1997–2024 · leading case: Wiskup v. Liberty Buick Co., Inc., 953 F. Supp. 958 (N.D. Ill. 1997).
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Wiskup v. Liberty Buick Co., Inc., 953 F. Supp. 958 (N.D. Ill. 1997). · cites it 4× “Next, plaintiff claims that defendants violated Illinois’ Uniform Commercial Code, 810 ILCS 5/9-207, by retaining interest earned on security deposits (Count IV).”
Steinmetz v. Toyota Motor Credit Corp., 963 F. Supp. 1294 (E.D.N.Y 1997). · cites it 2× “This quasi-trust relationship, with its corresponding rights and duties, was different in kind from the relationship between a secured party and a debtor, and was not implicated at all by the passage of 810 ILCS 5/9-207 [the analogue to N.Y.U.C.”
Paloian v. Grupo Serla S.A. De C v. (In Re GGSI Liquidation Inc.), 351 B.R. 529 (Bankr. N.D. Ill. 2006). “A separate judgment will enter in favor of Plaintiff against Bank One for damages based on Bank One’s breach of its duty as a secured party pursuant to § 9-207 of the Uniform Commercial Code as adopted in Illinois, 810 ILCS 5/9-207, and for its transfer of the Goss property…”
Martin v. Gold Key Lease, Inc., 988 F. Supp. 1101 (N.D. Ill. 1997). · cites it 2× “The complaint seeks recovery of interest and profits under Illinois’ Uniform Commercial Code (“UCC”), 810 ILCS 5/9-207, and the Illinois Consumer Deposit Security Act (“CDSA”), 815 ILCS 165/1 et seq.”
Spina v. Toyota Motor Credit Corp. (Ill. App. Ct. 1998). · cites it 6× “Applying Wisconsin's version of the UCC, the Demitropoulos II court found section 207 of that Code (identical to 810 ILCS 5/9-207) applied to the plaintiffs' automobile lease security deposits.”
Quigg v. Saleem, 2024 IL App (4th) 230703-U (Ill. App. Ct. 2024). “Quigg pointed to section 9-207(b)(4)(C) (810 ILCS 5/9-207(b)(4)(C) (West 2018)), which provided that parties in possession of collateral may use that collateral in any manner agreed to by the parties.”
— 810 ILCS 5/9-207(2) — 3 cases
Wiskup v. Liberty Buick Co., Inc., 953 F. Supp. 958 (N.D. Ill. 1997). “Next, plaintiff claims that defendants violated Illinois’ Uniform Commercial Code, 810 ILCS 5/9-207, by retaining interest earned on security deposits (Count IV).”
Steinmetz v. Toyota Motor Credit Corp., 963 F. Supp. 1294 (E.D.N.Y 1997). “This quasi-trust relationship, with its corresponding rights and duties, was different in kind from the relationship between a secured party and a debtor, and was not implicated at all by the passage of 810 ILCS 5/9-207 [the analogue to N.Y.U.C.”
Spina v. Toyota Motor Credit Corp. (Ill. App. Ct. 1998). “Applying Wisconsin's version of the UCC, the Demitropoulos II court found section 207 of that Code (identical to 810 ILCS 5/9-207) applied to the plaintiffs' automobile lease security deposits.”
— 810 ILCS 5/9-207(2)(c) — 2 cases
Martin v. Gold Key Lease, Inc., 988 F. Supp. 1101 (N.D. Ill. 1997). “The complaint seeks recovery of interest and profits under Illinois’ Uniform Commercial Code (“UCC”), 810 ILCS 5/9-207, and the Illinois Consumer Deposit Security Act (“CDSA”), 815 ILCS 165/1 et seq.”
Spina v. Toyota Motor Credit Corp. (Ill. App. Ct. 1998). “Applying Wisconsin's version of the UCC, the Demitropoulos II court found section 207 of that Code (identical to 810 ILCS 5/9-207) applied to the plaintiffs' automobile lease security deposits.”
— 810 ILCS 5/9-207(2)(d) — 1 case
Spina v. Toyota Motor Credit Corp. (Ill. App. Ct. 1998). “Applying Wisconsin's version of the UCC, the Demitropoulos II court found section 207 of that Code (identical to 810 ILCS 5/9-207) applied to the plaintiffs' automobile lease security deposits.”
— 810 ILCS 5/9-207(b)(4)(C) — 1 case
Quigg v. Saleem, 2024 IL App (4th) 230703-U (Ill. App. Ct. 2024). “Quigg pointed to section 9-207(b)(4)(C) (810 ILCS 5/9-207(b)(4)(C) (West 2018)), which provided that parties in possession of collateral may use that collateral in any manner agreed to by the parties.”
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