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<law><site_title>Virginia Decoded</site_title><site_url>https://vacode.org</site_url><law_id>86952</law_id><section_number>8.9A-407</section_number><catch_line>Restrictions on creation or enforcement of security interest in leasehold interest or in lessor&amp;#8217;s residual interest</catch_line><edition url="https://vacode.org/2025/" slug="2025" current="TRUE" last_updated="">2025</edition><referred_to_by><reference>8.2A-303</reference><reference>8.9A-406</reference></referred_to_by><structure><unit label="title" level="1" order_by="1" identifier="8.9A">Commercial Code &#x2014; Secured Transactions</unit><unit label="part" level="2" order_by="1" identifier="4">Rights of Third Parties</unit></structure><text>
						<section id="a"><p><span class="prefix-number">a.</span> Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b), a term in a lease agreement is ineffective to the extent that it: <a id="paragraph-311319" class="section-permalink" href="https://vacode.org/8.9A-407/#a"><i class="fa fa-link"/></a></p></section>
						<section id="a1" class="indent-1"><p><span class="prefix-number">1.</span> prohibits, restricts, or requires the consent of a <span class="dictionary">party</span> to the lease to the assignment or transfer of, or the creation, <span class="dictionary">attachment</span>, perfection, or enforcement of a security interest in, an interest of a <span class="dictionary">party</span> under the lease <span class="dictionary">contract</span> or in the lessor&#x2019;s residual interest in the goods; or <a id="paragraph-311320" class="section-permalink" href="https://vacode.org/8.9A-407/#a1"><i class="fa fa-link"/></a></p></section>
						<section id="a2" class="indent-1"><p><span class="prefix-number">2.</span> provides that the assignment or transfer or the creation, <span class="dictionary">attachment</span>, perfection, or enforcement of the security interest may give rise to a <span class="dictionary">default</span>, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease. <a id="paragraph-311321" class="section-permalink" href="https://vacode.org/8.9A-407/#a2"><i class="fa fa-link"/></a></p></section>
						<section id="b"><p><span class="prefix-number">b.</span> Effectiveness of certain terms. Except as otherwise provided in &#xA7;&#xA0;<a class="law" title="Alienability of party's interest under lease contract or of lessor's residual interest in goods; delegation of performance; transfer of rights" href="/8.2A-303/">8.2A-303</a> (7), a term described in subsection (a) (2) is effective to the extent that there is: <a id="paragraph-311322" class="section-permalink" href="https://vacode.org/8.9A-407/#b"><i class="fa fa-link"/></a></p></section>
						<section id="b1" class="indent-1"><p><span class="prefix-number">1.</span> a transfer by the lessee of the lessee&#x2019;s right of <span class="dictionary">possession</span> or use of the goods in violation of the term; or <a id="paragraph-311323" class="section-permalink" href="https://vacode.org/8.9A-407/#b1"><i class="fa fa-link"/></a></p></section>
						<section id="b2" class="indent-1"><p><span class="prefix-number">2.</span> a delegation of a <span class="dictionary">material</span> performance of either <span class="dictionary">party</span> to the lease <span class="dictionary">contract</span> in violation of the term. <a id="paragraph-311324" class="section-permalink" href="https://vacode.org/8.9A-407/#b2"><i class="fa fa-link"/></a></p></section>
						<section id="c"><p><span class="prefix-number">c.</span> Security interest not <span class="dictionary">material</span> impairment. The creation, <span class="dictionary">attachment</span>, perfection, or enforcement of a security interest in the lessor&#x2019;s interest under the lease <span class="dictionary">contract</span> or the lessor&#x2019;s residual interest in the goods is not a transfer that materially impairs the lessee&#x2019;s prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of &#xA7; <a class="law" title="Alienability of party's interest under lease contract or of lessor's residual interest in goods; delegation of performance; transfer of rights" href="/8.2A-303/">8.2A-303</a> (4) unless, and then only to the extent that, enforcement actually results in a delegation of <span class="dictionary">material</span> performance of the lessor. <a id="paragraph-311325" class="section-permalink" href="https://vacode.org/8.9A-407/#c"><i class="fa fa-link"/></a></p></section></text><history>1991, c. 536, &#xA7; 8.2A-303; 2000, c. 1007.</history><metadata></metadata></law>
