§ 336.2A-527 — Lessor's Rights to Dispose of Goods
Plain-Language Summary
After a lessee defaults, or after the lessor refuses to deliver or repossesses the goods, the lessor may dispose of the goods by re-leasing, selling, or otherwise. If the lessor re-leases the goods under a new lease that is substantially similar to the original and is made in good faith and in a commercially reasonable way, the lessor may recover accrued unpaid rent plus the difference between the present value of the remaining rent under the original lease and the present value of the rent under the new lease for the comparable period, along with any incidental damages, less expenses saved. A good-faith buyer or new lessee takes the goods free of the original lease, and the lessor does not have to account to the original lessee for any profit on the disposition.
336.2A-527 LESSOR’S RIGHTS TO DISPOSE OF GOODS.
(1) After a default by a lessee under the lease contract of the type described in section 336.2A-523(1) or 336.2A-523(3)(a) or after the lessor refuses to deliver or takes possession of goods (section 336.2A-525 or 336.2A-526), or, if agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the undelivered balance by lease, sale, or otherwise.
(2) Except as otherwise provided with respect to damages liquidated in the lease agreement (section 336.2A-504) or otherwise determined pursuant to agreement of the parties (sections 336.1-302 and 336.2A-503), if the disposition is by lease agreement substantially similar to the original lease agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, the lessor may recover from the lessee as damages (i) accrued and unpaid rent as of the date of the start of the term of the new lease agreement, (ii) the present value, as of the same date, of the total rent for the then remaining lease term of the original lease agreement minus the present value, as of the same date, of the rent under the new lease agreement applicable to that period of the new lease term that is comparable to the then remaining term of the original lease agreement, and (iii) any incidental damages allowed under section 336.2A-530, less expenses saved in consequence of the lessee’s default.
(3) If the lessor’s disposition is by lease agreement that for any reason does not qualify for treatment under subsection (2), or is by sale or otherwise, the lessor may recover from the lessee as if the lessor had elected not to dispose of the goods and section 336.2A-528 governs.
(4) A subsequent buyer or lessee who buys or leases from the lessor in good faith for value as a result of a disposition under this section takes the goods free of the original lease contract and any rights of the original lessee even though the lessor fails to comply with one or more of the requirements of this article.
(5) The lessor is not accountable to the lessee for any profit made on any disposition. A lessee who has rightfully rejected or justifiably revoked acceptance shall account to the lessor for any excess over the amount of the lessee’s security interest (section 336.2A-508(5)).
History:
1989 c 232 art 1 s 2A-527; 1991 c 171 art 1 s 19; 2004 c 162 art 2 s 7
History: History: 1989 c 232 art 1 s 2A-527; 1991 c 171 art 1 s 19; 2004 c 162 art 2 s 7