Nonliability and limitation on liability of secured party; liability of secondary obligor

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  • (a) Limitation of liability of secured party for noncompliance with article. 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 article; and

    • (2) the secured party's failure to comply with this article does not affect the liability of the person for a deficiency.

  • (b) Limitation of liability based on status as secured party. 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) Limitation of liability if reasonable belief that transaction not a consumer goods transaction or consumer transaction. 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) Limitation of liability for statutory damages. A secured party is not liable to any person under § 9–625(c)(2) for its failure to comply with § 9–616.

  • (e) Limitation of multiple liability for statutory damages. A secured party is not liable under § 9–625(c)(2) more than once with respect to any one secured obligation.


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