Written by attorneys · grounded in primary & secondary sources — see below
A reasonable authenticated notification that a secured party must send before disposing of collateral under Section 9-610. The notification must be sent to the debtor and any secondary obligor, and in non-consumer transactions certain other secured parties or lienholders, within a reasonable time before the disposition occurs.
Sources & Authorities
How it applies
Common Examples
2
Bank Fails to Notify Guarantor
Prairie Bank repossessed stored grain from Greenfield Farms after default and sold it at a commodities exchange. The bank telephoned Maria Greenfield and sent her an unsigned email that omitted the sale date, time, and location. Prairie Bank sent no communication at all to Prairie Cooperative, the guarantor. The disposition is not commercially proper because the bank failed to send a reasonable authenticated notification to both the debtor and the secondary obligor.
Creditor Skips Required Notice
Clover Commercial repossessed a vehicle from Nigel Nelson after default and arranged a private sale. The creditor sent no authenticated notification describing the disposition to Nelson or to any secondary obligor. The court held the disposition improper because the secured party had not complied with the requirement to send reasonable authenticated notification before selling the collateral.
Put it into practice
Test Yourself
8
Practice Questions5
· 8 primary sources
Select any source to read its text and confirm it supports the definition.
Who must receive the notification of disposition?+
The secured party must send the notification to the debtor and any secondary obligor. In non-consumer transactions the secured party must also notify other secured parties and lienholders who hold perfected interests in the same collateral and are reasonably discoverable.
Supporting sources
What makes a notification of disposition reasonable?+
The notification must be authenticated, sent in a manner reasonably calculated to reach the required recipients, and contain sufficient information about the disposition, including the method of sale and, for a public sale, the time and place. It must be sent within a reasonable time before the disposition occurs.
Supporting sources
Does actual knowledge of repossession excuse the need for formal notification?+
No. General warnings of repossession or payment demands that do not mention an upcoming disposition or provide sale details do not satisfy the requirement of a reasonable authenticated notification of disposition.
Supporting sources
What happens if the secured party fails to send proper notification?+
The disposition is not commercially proper with respect to notice. The secured party may lose the right to a deficiency judgment or face other remedies available to the debtor and secondary obligor.
Supporting sources
Secured TransactionsDefault (§ 9-601, et seq.) · Rights and remedies on default (§§ 9-601 through 9-606)UBEFoundational