                                 CODE OF VIRGINIA

APPLICATION OF PROCEEDS OF DISPOSITION; LIABILITY FOR DEFICIENCY AND RIGHT TO
SURPLUS (§ 8.9A-615)

a. Application of proceeds. A secured party shall apply or pay over for
application the cash proceeds of disposition under § 8.9A-610 in the following
order to:

   1. the reasonable expenses of retaking, holding, preparing for disposition,
   processing, and disposing, 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;

   2. the satisfaction of obligations secured by the security interest or
   agricultural lien under which the disposition is made;

   3. the satisfaction of obligations secured by any subordinate security
   interest in or other subordinate lien on the collateral if:

A. the secured party receives from the holder of the subordinate security
interest or other lien a signed demand for proceeds before distribution of the
proceeds is completed; and

B. in a case in which a consignor has an interest in the collateral, the
subordinate security interest or other lien is senior to the interest of the
consignor; and

   4. a secured party that is a consignor of the collateral if the secured party
   receives from the consignor a signed demand for proceeds before distribution
   of the proceeds is completed.

b. Proof of subordinate interest. 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 does so, the
secured party need not comply with the holder&#8217;s demand under subsection
(a) (3).

c. Application of noncash proceeds. A secured party need not apply or pay over
for application noncash proceeds of disposition under &#xA7; 8.9A-610 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.

d. Surplus or deficiency if obligation secured. If the security interest under
which a disposition is made secures payment or performance of an obligation,
after making the payments and applications required by subsection (a) and
permitted by subsection (c):

   1. unless subsection (a) (4) requires the secured party to apply or pay over
   cash proceeds to a consignor, the secured party shall account to and pay a
   debtor for any surplus; and

   2. the obligor is liable for any deficiency.

e. 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:

   1. the debtor is not entitled to any surplus; and

   2. the obligor is not liable for any deficiency.

f. Calculation of surplus or deficiency in disposition to person related to
secured party. The surplus or deficiency following a disposition is calculated
based on the amount of proceeds that would have been realized in a disposition
complying with this part to a transferee other than the secured party, a person
related to the secured party, or a secondary obligor if:

   1. the transferee in the disposition is the secured party, a person related to
   the secured party, or a secondary obligor; and

   2. the amount of proceeds of the disposition is significantly below the range
   of proceeds that a complying disposition to a person other than the secured
   party, a person related to the secured party, or a secondary obligor would
   have brought.

HISTORY: 1964, c. 219, § 8.9-504; 1973, c. 509; 2000, c. 1007; 2024, c. 652.