Texas Business & Commerce Code

§ 9.207 — RIGHTS AND DUTIES OF SECURED PARTY HAVING POSSESSION OR CONTROL OF COLLATERAL

BC § 9.207Title 1. UNIFORM COMMERCIAL CODE · Ch. 9. SECURED TRANSACTIONS · Art. B. EFFECTIVENESS OF SECURITY AGREEMENT; ATTACHMENT OF SECURITY INTEREST; RIGHTS OF PARTIES TO SECURITY AGREEMENT

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(a)Except as otherwise provided in Subsection (d), a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.

(b)Except as otherwise provided in Subsection (d), if a secured party has possession of collateral:

(1)reasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to the debtor and are secured by the collateral;

(2)the risk of accidental loss or damage is on the debtor to the extent of any deficiency in any effective insurance coverage;

(3)the secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and

(4)the secured party may use or operate the collateral:

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Legislative history

Acts 2005, 79th Leg., Ch. 122 (S.B. 1593), Sec. 21, eff. September 1, 2005.