                                 CODE OF VIRGINIA

APPLICATION OF PROCEEDS OF COLLECTION OR ENFORCEMENT; LIABILITY FOR DEFICIENCY
AND RIGHT TO SURPLUS (§ 8.9A-608)

a. Application of proceeds, surplus, and deficiency if obligation secured. If a
security interest or agricultural lien secures payment or performance of an
obligation, the following rules apply:

   1. A secured party shall apply or pay over for application the cash proceeds
   of collection or enforcement under &#xA7; 8.9A-607 in the following order to:

A. the reasonable expenses of collection and enforcement and, to the extent
provided for by agreement and not prohibited by law, reasonable attorney&#8217;s
fees and legal expenses incurred by the secured party;

B. the satisfaction of obligations secured by the security interest or
agricultural lien under which the collection or enforcement is made; and

C. the satisfaction of obligations secured by any subordinate security interest
in or other lien on the collateral subject to the security interest or
agricultural lien under which the collection or enforcement is made if the
secured party receives a signed demand for proceeds before distribution of the
proceeds is completed.

   2. If requested by a secured party, a holder of a subordinate security
   interest or other lien shall furnish reasonable proof of the interest or lien
   within a reasonable time. Unless the holder complies, the secured party need
   not comply with the holder&#8217;s demand under subsection (a) (1) (C).

   3. A secured party need not apply or pay over for application noncash proceeds
   of collection and enforcement under &#xA7; 8.9A-607 unless the failure to do
   so would be commercially unreasonable. A secured party that applies or pays
   over for application noncash proceeds shall do so in a commercially reasonable
   manner.

   4. A secured party shall account to and pay a debtor for any surplus, and the
   obligor is liable for any deficiency.

b. No surplus or deficiency in sales of certain rights to payment. If the
underlying transaction is a sale of accounts, chattel paper, payment
intangibles, or promissory notes, the debtor is not entitled to any surplus, and
the obligor is not liable for any deficiency.

HISTORY: 2000, c. 1007; 2024, c. 652.