TITLE 28

COMMERCIAL TRANSACTIONS

CHAPTER 9

SECURED TRANSACTIONS

PART 6.

DEFAULT

28-9-628.  Nonliability and limitation on liability of secured party — Liability of secondary obligor. (a) Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:

(1)  The secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this chapter; and

(2)  The secured party’s failure to comply with this chapter does not affect the liability of the person for a deficiency.

(b)  A secured party is not liable because of its status as secured party:

(1)  To a person that is a debtor or obligor, unless the secured party knows:

(A)  that the person is a debtor or obligor;

(B)  the identity of the person; and

(C)  how to communicate with the person; or

(2)  To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

(A)  that the person is a debtor; and

(B)  the identity of the person.

(c)  A secured party is not liable to any person, and a person’s liability for a deficiency is not affected, because of any act or omission arising out of the secured party’s reasonable belief that a transaction is not a consumer goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party’s belief is based on its reasonable reliance on:

(1)  A debtor’s representation concerning the purpose for which collateral was to be used, acquired or held; or

(2)  An obligor’s representation concerning the purpose for which a secured obligation was incurred.

(d)  A secured party is not liable to any person under section 28-9-625(c)(2) for its failure to comply with section 28-9-616.

(e)  A secured party is not liable under section 28-9-625(c)(2) more than once with respect to any one (1) secured obligation.

History:

[28-9-628, added 2001, ch. 208, sec. 2, p. 796.]