                                 CODE OF VIRGINIA

SECURITY INTEREST OF COLLECTING BANK IN ITEMS, ACCOMPANYING DOCUMENTS AND
PROCEEDS (§ 8.4-208)

a. A collecting bank has a security interest in an item and any accompanying
documents or the proceeds of either:

   1. in case of an item deposited in an account to the extent to which credit
   given for the item has been withdrawn or applied;

   2. in case of an item for which it has given credit available for withdrawal
   as of right, to the extent of the credit given, whether or not the credit is
   drawn upon or there is a right of charge-back; or

   3. if it makes an advance on or against the item.

b. If credit given for several items received at one time or pursuant to a
single agreement is withdrawn or applied in part, the security interest remains
upon all the items, any accompanying documents or the proceeds of either. For
the purpose of this section, credits first given are first withdrawn.

c. Receipt by a collecting bank of a final settlement for an item is a
realization on its security interest in the item, accompanying documents and
proceeds. So long as the bank does not receive final settlement for the item or
give up possession of the item or possession or control of accompanying
documents for purposes other than collection, the security interest continues to
that extent and is subject to Title 8.9A but:

   1. no security agreement is necessary to make the security interest
   enforceable (subdivision (b) (3) (A) of &#xA7; 8.9A-203); and

   2. no filing is required to perfect the security interest; and

   3. the security interest has priority over conflicting perfected security
   interests in the item, accompanying documents or proceeds.

HISTORY: 1964, c. 219; 1992, c. 693; 2000, c. 1007; 2004, c. 200.