{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/8.9A-408.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/8.9A-408.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/8.9A-408.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/8.9A-408.html"}],"law_id":86931,"edition_id":1,"section_id":86931,"structure_id":15875,"section_number":"8.9A-408","catch_line":"Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective","history":"2000, c. 1007; 2001, c. 537; 2003, c. 340; 2012, c. 155; 2024, c. 652.","full_text":"a\n\nTerm restricting assignment generally ineffective. Except as otherwise provided in subsection (b), a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a security interest in, the promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent that the term:1\n\nwould impair the creation, attachment, or perfection of a security interest; or2\n\nprovides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.b\n\nApplicability of subsection (a) to sales of certain rights to payment. Subsection (a) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note, other than a sale pursuant to a disposition under § 8.9A-610 or an acceptance of collateral under § 8.9A-620.c\n\nLegal restrictions on assignment generally ineffective. A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note, or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or regulation:1\n\nwould impair the creation, attachment, or perfection of a security interest; or2\n\nprovides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.d\n\nLimitation on ineffectiveness under subsections (a) and (c). To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute, or regulation described in subsection (c) would be effective under law other than this title but is ineffective under subsection (a) or (c), the creation, attachment, or perfection of a security interest in the promissory note, health-care-insurance receivable, or general intangible:1\n\nis not enforceable against the person obligated on the promissory note or the account debtor;2\n\ndoes not impose a duty or obligation on the person obligated on the promissory note or the account debtor;3\n\ndoes not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;4\n\ndoes not entitle the secured party to use or assign the debtor’s rights under the promissory note, health-care-insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable, or general intangible;5\n\ndoes not entitle the secured party to use, assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and6\n\ndoes not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable, or general intangible.e\n\nInapplicability of subsection (a) to certain payment intangibles. Subsection (a) does not apply to:1\n\nthe sale of a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (2), as amended from time to time, provided that no inference shall be drawn regarding the enforceability or nonenforceability under other law or any term in an agreement which prohibits, restricts, or requires consent to the sale of such claim or right described in 26 U.S.C. § 104 (a) (2);2\n\na claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (1), as amended from time to time; or3\n\na claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p (d) (4), as amended from time to time.f\n\nInapplicability of subsection (c) to certain payment intangibles. Subsection (c) does not apply to:1\n\na claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (1) or (2), as amended from time to time; or2\n\na claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p (d) (4), as amended from time to time.g\n\nInapplicability to partnership and limited liability company interests. This section does not apply to an interest in a partnership or limited liability company.h\n\nPromissory note. In this section, “promissory note” includes a negotiable instrument that evidences chattel paper.","order_by":null,"text":{"0":{"id":311225,"text":"Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b), a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a security interest in, the promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent that the term:","type":"section","prefixes":["a"],"prefix":"a","entire_prefix":"a","prefix_anchor":"a","level":1,"next_prefix":"a1"},"1":{"id":311226,"text":"would impair the creation, attachment, or perfection of a security interest; or","type":"section","prefixes":["a","1"],"prefix":"1","entire_prefix":"a1","prefix_anchor":"a1","level":2,"prior_prefix":"a","next_prefix":"a2"},"2":{"id":311227,"text":"provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.","type":"section","prefixes":["a","2"],"prefix":"2","entire_prefix":"a2","prefix_anchor":"a2","level":2,"prior_prefix":"a1","next_prefix":"b"},"3":{"id":311228,"text":"Applicability of subsection (a) to sales of certain rights to payment. Subsection (a) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note, other than a sale pursuant to a disposition under § 8.9A-610 or an acceptance of collateral under § 8.9A-620.","type":"section","prefixes":["b"],"prefix":"b","entire_prefix":"b","prefix_anchor":"b","level":1,"prior_prefix":"a2","next_prefix":"c"},"4":{"id":311229,"text":"Legal restrictions on assignment generally ineffective. A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note, or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or regulation:","type":"section","prefixes":["c"],"prefix":"c","entire_prefix":"c","prefix_anchor":"c","level":1,"prior_prefix":"b","next_prefix":"c1"},"5":{"id":311230,"text":"would impair the creation, attachment, or perfection of a security interest; or","type":"section","prefixes":["c","1"],"prefix":"1","entire_prefix":"c1","prefix_anchor":"c1","level":2,"prior_prefix":"c","next_prefix":"c2"},"6":{"id":311231,"text":"provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.","type":"section","prefixes":["c","2"],"prefix":"2","entire_prefix":"c2","prefix_anchor":"c2","level":2,"prior_prefix":"c1","next_prefix":"d"},"7":{"id":311232,"text":"Limitation on ineffectiveness under subsections (a) and (c). To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute, or regulation described in subsection (c) would be effective under law other than this title but is ineffective under subsection (a) or (c), the creation, attachment, or perfection of a security interest in the promissory note, health-care-insurance receivable, or general intangible:","type":"section","prefixes":["d"],"prefix":"d","entire_prefix":"d","prefix_anchor":"d","level":1,"prior_prefix":"c2","next_prefix":"d1"},"8":{"id":311233,"text":"is not enforceable against the person obligated on the promissory note or the account debtor;","type":"section","prefixes":["d","1"],"prefix":"1","entire_prefix":"d1","prefix_anchor":"d1","level":2,"prior_prefix":"d","next_prefix":"d2"},"9":{"id":311234,"text":"does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;","type":"section","prefixes":["d","2"],"prefix":"2","entire_prefix":"d2","prefix_anchor":"d2","level":2,"prior_prefix":"d1","next_prefix":"d3"},"10":{"id":311235,"text":"does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;","type":"section","prefixes":["d","3"],"prefix":"3","entire_prefix":"d3","prefix_anchor":"d3","level":2,"prior_prefix":"d2","next_prefix":"d4"},"11":{"id":311236,"text":"does not entitle the secured party to use or assign the debtor’s rights under the promissory note, health-care-insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable, or general intangible;","type":"section","prefixes":["d","4"],"prefix":"4","entire_prefix":"d4","prefix_anchor":"d4","level":2,"prior_prefix":"d3","next_prefix":"d5"},"12":{"id":311237,"text":"does not entitle the secured party to use, assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and","type":"section","prefixes":["d","5"],"prefix":"5","entire_prefix":"d5","prefix_anchor":"d5","level":2,"prior_prefix":"d4","next_prefix":"d6"},"13":{"id":311238,"text":"does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable, or general intangible.","type":"section","prefixes":["d","6"],"prefix":"6","entire_prefix":"d6","prefix_anchor":"d6","level":2,"prior_prefix":"d5","next_prefix":"e"},"14":{"id":311239,"text":"Inapplicability of subsection (a) to certain payment intangibles. Subsection (a) does not apply to:","type":"section","prefixes":["e"],"prefix":"e","entire_prefix":"e","prefix_anchor":"e","level":1,"prior_prefix":"d6","next_prefix":"e1"},"15":{"id":311240,"text":"the sale of a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (2), as amended from time to time, provided that no inference shall be drawn regarding the enforceability or nonenforceability under other law or any term in an agreement which prohibits, restricts, or requires consent to the sale of such claim or right described in 26 U.S.C. § 104 (a) (2);","type":"section","prefixes":["e","1"],"prefix":"1","entire_prefix":"e1","prefix_anchor":"e1","level":2,"prior_prefix":"e","next_prefix":"e2"},"16":{"id":311241,"text":"a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (1), as amended from time to time; or","type":"section","prefixes":["e","2"],"prefix":"2","entire_prefix":"e2","prefix_anchor":"e2","level":2,"prior_prefix":"e1","next_prefix":"e3"},"17":{"id":311242,"text":"a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p (d) (4), as amended from time to time.","type":"section","prefixes":["e","3"],"prefix":"3","entire_prefix":"e3","prefix_anchor":"e3","level":2,"prior_prefix":"e2","next_prefix":"f"},"18":{"id":311243,"text":"Inapplicability of subsection (c) to certain payment intangibles. Subsection (c) does not apply to:","type":"section","prefixes":["f"],"prefix":"f","entire_prefix":"f","prefix_anchor":"f","level":1,"prior_prefix":"e3","next_prefix":"f1"},"19":{"id":311244,"text":"a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (1) or (2), as amended from time to time; or","type":"section","prefixes":["f","1"],"prefix":"1","entire_prefix":"f1","prefix_anchor":"f1","level":2,"prior_prefix":"f","next_prefix":"f2"},"20":{"id":311245,"text":"a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p (d) (4), as amended from time to time.","type":"section","prefixes":["f","2"],"prefix":"2","entire_prefix":"f2","prefix_anchor":"f2","level":2,"prior_prefix":"f1","next_prefix":"g"},"21":{"id":311246,"text":"Inapplicability to partnership and limited liability company interests. This section does not apply to an interest in a partnership or limited liability company.","type":"section","prefixes":["g"],"prefix":"g","entire_prefix":"g","prefix_anchor":"g","level":1,"prior_prefix":"f2","next_prefix":"h"},"22":{"id":311247,"text":"Promissory note. In this section, “promissory note” includes a negotiable instrument that evidences chattel paper.","type":"section","prefixes":["h"],"prefix":"h","entire_prefix":"h","prefix_anchor":"h","level":1,"prior_prefix":"g"}},"ancestry":[{"id":15875,"edition_id":1,"name":"Rights of Third Parties","identifier":"4","label":"part","depth":2,"order_by":1,"parent_id":13277,"metadata":{},"date_created":"2026-06-26 04:00:59","date_modified":"2026-06-26 04:00:59","permalink":{"id":284137,"object_type":"structure","relational_id":15875,"identifier":"4","token":"8.9A\/4","url":"\/8.9A\/4\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13277,"edition_id":1,"name":"Commercial Code \u2014 Secured Transactions","identifier":"8.9A","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:44:33","date_modified":"2026-06-26 03:44:33","permalink":{"id":283833,"object_type":"structure","relational_id":13277,"identifier":"8.9A","token":"8.9A","url":"\/8.9A\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":61383,"structure_id":15875,"section_number":"8.9A-401","catch_line":"Alienability of debtor's rights","url":"\/8.9A-401\/","token":"8.9A\/4\/8.9A-401","metadata":false},{"id":74669,"structure_id":15875,"section_number":"8.9A-402","catch_line":"Secured party not obligated on contract of debtor or in tort","url":"\/8.9A-402\/","token":"8.9A\/4\/8.9A-402","metadata":false},{"id":81896,"structure_id":15875,"section_number":"8.9A-403","catch_line":"Agreement not to assert defenses against assignee","url":"\/8.9A-403\/","token":"8.9A\/4\/8.9A-403","metadata":false},{"id":67314,"structure_id":15875,"section_number":"8.9A-404","catch_line":"Rights acquired by assignee; claims and defenses against assignee","url":"\/8.9A-404\/","token":"8.9A\/4\/8.9A-404","metadata":false},{"id":78678,"structure_id":15875,"section_number":"8.9A-405","catch_line":"Modification of assigned contract","url":"\/8.9A-405\/","token":"8.9A\/4\/8.9A-405","metadata":false},{"id":78910,"structure_id":15875,"section_number":"8.9A-406","catch_line":"Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles, and promissory notes ineffective","url":"\/8.9A-406\/","token":"8.9A\/4\/8.9A-406","metadata":false},{"id":86952,"structure_id":15875,"section_number":"8.9A-407","catch_line":"Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest","url":"\/8.9A-407\/","token":"8.9A\/4\/8.9A-407","metadata":false},{"id":86931,"structure_id":15875,"section_number":"8.9A-408","catch_line":"Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective","url":"\/8.9A-408\/","token":"8.9A\/4\/8.9A-408","metadata":false},{"id":75200,"structure_id":15875,"section_number":"8.9A-409","catch_line":"Restrictions on assignment of letter-of-credit rights ineffective","url":"\/8.9A-409\/","token":"8.9A\/4\/8.9A-409","metadata":false}],"previous_section":{"id":86952,"structure_id":15875,"section_number":"8.9A-407","catch_line":"Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest","url":"\/8.9A-407\/","token":"8.9A\/4\/8.9A-407","metadata":false},"next_section":{"id":75200,"structure_id":15875,"section_number":"8.9A-409","catch_line":"Restrictions on assignment of letter-of-credit rights ineffective","url":"\/8.9A-409\/","token":"8.9A\/4\/8.9A-409","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/8.9A-408\/","history_text":"

This law was first created in 2000. The record of its establishment is cataloged in chapter 1007<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. It has been modified 4 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 2001, chapter 537<\/a>; in 2003, chapter 340<\/a>; in 2012, chapter 155<\/a>; in 2024, chapter 652<\/a>.<\/p>","references":[{"id":83973,"section_number":"13.1-1001.1","catch_line":"Construction","order_by":null,"url":"\/13.1-1001.1\/"},{"id":82870,"section_number":"50-73.84","catch_line":"Law governing internal relations","order_by":null,"url":"\/50-73.84\/"}],"refers_to":[{"id":83035,"section_number":"8.9A-610","catch_line":"Disposition of collateral after default","order_by":null,"url":"\/8.9A-610\/"}],"permalink":{"id":284167,"object_type":"law","relational_id":86931,"identifier":"8.9A-408","token":"8.9A\/4\/8.9A-408","url":"\/8.9A-408\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/8.9A-408\/","token":"8.9A\/4\/8.9A-408","dublin_core":{"Title":"Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective","Type":"Text","Format":"text\/html","Identifier":"\u00a7 8.9A-408","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

a.<\/span> Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b), a term in a promissory note<\/span> or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract<\/span>, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note<\/span> or the account debtor to, the assignment or transfer of, or creation, attachment<\/span>, or perfection of a security interest in, the promissory note<\/span>, health-care-insurance receivable, or general intangible, is ineffective to the extent that the term: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> would impair the creation, attachment<\/span>, or perfection of a security interest; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> provides that the assignment or transfer or the creation, attachment<\/span>, or perfection of the security interest may give rise to a default<\/span>, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note<\/span>, health-care-insurance receivable, or general intangible. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

b.<\/span> Applicability of subsection (a) to sales of certain rights to payment. Subsection (a) applies to a security interest in a payment intangible or promissory note<\/span> only if the security interest arises out of a sale of the payment intangible or promissory note<\/span>, other than a sale pursuant to a disposition<\/span> under § 8.9A-610<\/a> or an acceptance of collateral<\/span> under § 8.9A-620<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

c.<\/span> Legal restrictions on assignment generally ineffective. A rule of law<\/span>, statute<\/span>, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note<\/span>, or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note<\/span>, health-care-insurance receivable, or general intangible, including a contract<\/span>, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law<\/span>, statute<\/span>, or regulation: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> would impair the creation, attachment<\/span>, or perfection of a security interest; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> provides that the assignment or transfer or the creation, attachment<\/span>, or perfection of the security interest may give rise to a default<\/span>, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note<\/span>, health-care-insurance receivable, or general intangible. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

d.<\/span> Limitation on ineffectiveness under subsections (a) and (c). To the extent that a term in a promissory note<\/span> or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law<\/span>, statute<\/span>, or regulation described in subsection (c) would be effective under law<\/span> other than this title but is ineffective under subsection (a) or (c), the creation, attachment<\/span>, or perfection of a security interest in the promissory note<\/span>, health-care-insurance receivable, or general intangible: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> is not enforceable against the person obligated on the promissory note<\/span> or the account debtor; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> does not impose a duty or obligation on the person obligated on the promissory note<\/span> or the account debtor; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> does not require the person obligated on the promissory note<\/span> or the account debtor to recognize the security interest, pay or render performance to the secured party<\/span>, or accept payment or performance from the secured party<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> does not entitle the secured party<\/span> to use or assign the debtor’s rights under the promissory note<\/span>, health-care-insurance receivable, or general intangible, including any related information or materials<\/span> furnished to the debtor in the transaction giving rise to the promissory note<\/span>, health-care-insurance receivable, or general intangible; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> does not entitle the secured party<\/span> to use, assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note<\/span> or the account debtor; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> does not entitle the secured party<\/span> to enforce the security interest in the promissory note<\/span>, health-care-insurance receivable, or general intangible. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

e.<\/span> Inapplicability of subsection (a) to certain payment intangibles. Subsection (a) does not apply to: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> the sale of a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (2), as amended from time to time, provided that no inference shall be drawn regarding the enforceability or nonenforceability under other law<\/span> or any term in an agreement which prohibits, restricts, or requires consent to the sale of such claim or right described in 26 U.S.C. § 104 (a) (2); <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (1), as amended from time to time; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p (d) (4), as amended from time to time. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

f.<\/span> Inapplicability of subsection (c) to certain payment intangibles. Subsection (c) does not apply to: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104 (a) (1) or (2), as amended from time to time; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p (d) (4), as amended from time to time. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

g.<\/span> Inapplicability to partnership and limited liability company interests. This section does not apply to an interest in a partnership or limited liability company. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

h.<\/span> Promissory note<\/span>. In this section, “promissory note<\/span>” includes a negotiable instrument that evidences<\/span> chattel paper. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nRESTRICTIONS ON ASSIGNMENT OF PROMISSORY NOTES, HEALTH-CARE-INSURANCE\nRECEIVABLES, AND CERTAIN GENERAL INTANGIBLES INEFFECTIVE (\u00a7 8.9A-408)\n\na. Term restricting assignment generally ineffective. Except as otherwise\nprovided in subsection (b), a term in a promissory note or in an agreement\nbetween an account debtor and a debtor which relates to a health-care-insurance\nreceivable or a general intangible, including a contract, permit, license, or\nfranchise, and which term prohibits, restricts, or requires the consent of the\nperson obligated on the promissory note or the account debtor to, the assignment\nor transfer of, or creation, attachment, or perfection of a security interest\nin, the promissory note, health-care-insurance receivable, or general\nintangible, is ineffective to the extent that the term:\n\n 1. would impair the creation, attachment, or perfection of a security\n interest; or\n\n 2. provides that the assignment or transfer or the creation, attachment, or\n perfection of the security interest may give rise to a default, breach, right\n of recoupment, claim, defense, termination, right of termination, or remedy\n under the promissory note, health-care-insurance receivable, or general\n intangible.\n\nb. Applicability of subsection (a) to sales of certain rights to payment.\nSubsection (a) applies to a security interest in a payment intangible or\npromissory note only if the security interest arises out of a sale of the\npayment intangible or promissory note, other than a sale pursuant to a\ndisposition under § 8.9A-610 or an acceptance of collateral under §\n8.9A-620.\n\nc. Legal restrictions on assignment generally ineffective. A rule of law,\nstatute, or regulation that prohibits, restricts, or requires the consent of a\ngovernment, governmental body or official, person obligated on a promissory\nnote, or account debtor to the assignment or transfer of, or creation of a\nsecurity interest in, a promissory note, health-care-insurance receivable, or\ngeneral intangible, including a contract, permit, license, or franchise between\nan account debtor and a debtor, is ineffective to the extent that the rule of\nlaw, statute, or regulation:\n\n 1. would impair the creation, attachment, or perfection of a security\n interest; or\n\n 2. provides that the assignment or transfer or the creation, attachment, or\n perfection of the security interest may give rise to a default, breach, right\n of recoupment, claim, defense, termination, right of termination, or remedy\n under the promissory note, health-care-insurance receivable, or general\n intangible.\n\nd. Limitation on ineffectiveness under subsections (a) and (c). To the extent\nthat a term in a promissory note or in an agreement between an account debtor\nand a debtor which relates to a health-care-insurance receivable or general\nintangible or a rule of law, statute, or regulation described in subsection (c)\nwould be effective under law other than this title but is ineffective under\nsubsection (a) or (c), the creation, attachment, or perfection of a security\ninterest in the promissory note, health-care-insurance receivable, or general\nintangible:\n\n 1. is not enforceable against the person obligated on the promissory note or\n the account debtor;\n\n 2. does not impose a duty or obligation on the person obligated on the\n promissory note or the account debtor;\n\n 3. does not require the person obligated on the promissory note or the account\n debtor to recognize the security interest, pay or render performance to the\n secured party, or accept payment or performance from the secured party;\n\n 4. does not entitle the secured party to use or assign the debtor’s\n rights under the promissory note, health-care-insurance receivable, or general\n intangible, including any related information or materials furnished to the\n debtor in the transaction giving rise to the promissory note,\n health-care-insurance receivable, or general intangible;\n\n 5. does not entitle the secured party to use, assign, possess, or have access\n to any trade secrets or confidential information of the person obligated on\n the promissory note or the account debtor; and\n\n 6. does not entitle the secured party to enforce the security interest in the\n promissory note, health-care-insurance receivable, or general intangible.\n\ne. Inapplicability of subsection (a) to certain payment intangibles. Subsection\n(a) does not apply to:\n\n 1. the sale of a claim or right to receive compensation for injuries or\n sickness as described in 26 U.S.C. § 104 (a) (2), as amended from time to\n time, provided that no inference shall be drawn regarding the enforceability\n or nonenforceability under other law or any term in an agreement which\n prohibits, restricts, or requires consent to the sale of such claim or right\n described in 26 U.S.C. § 104 (a) (2);\n\n 2. a claim or right to receive compensation for injuries or sickness as\n described in 26 U.S.C. § 104 (a) (1), as amended from time to time; or\n\n 3. a claim or right to receive benefits under a special needs trust as\n described in 42 U.S.C. § 1396p (d) (4), as amended from time to time.\n\nf. Inapplicability of subsection (c) to certain payment intangibles. Subsection\n(c) does not apply to:\n\n 1. a claim or right to receive compensation for injuries or sickness as\n described in 26 U.S.C. § 104 (a) (1) or (2), as amended from time to\n time; or\n\n 2. a claim or right to receive benefits under a special needs trust as\n described in 42 U.S.C. § 1396p (d) (4), as amended from time to time.\n\ng. Inapplicability to partnership and limited liability company interests. This\nsection does not apply to an interest in a partnership or limited liability\ncompany.\n\nh. Promissory note. In this section, “promissory note” includes a\nnegotiable instrument that evidences chattel paper.\n\nHISTORY: 2000, c. 1007; 2001, c. 537; 2003, c. 340; 2012, c. 155; 2024, c. 652.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}