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Can you summarize IACO 554.9407?
UNIFORM COMMERCIAL CODE > Restrictions on creation or enforcement of security interest in leasehold interest or in lessors residual interest.
Short Summary
This legal document, governed by the Iowa Code, specifically the Uniform Commercial Code, addresses restrictions on the creation or enforcement of security interests in leasehold interests or lessor’s residual interest. It states that a term in a lease agreement is generally ineffective if it prohibits, restricts, or requires consent for the assignment, transfer, creation, attachment, perfection, or enforcement of a security interest in a party’s interest under the lease contract or the lessor’s residual interest in the goods. Additionally, a term that allows such actions may give rise to default, breach, recoupment, claim, defense, termination, or remedy under the lease. However, there are exceptions if there is a transfer of possession or use of the goods in violation of the term or a delegation of material performance in violation of the term. The document also clarifies that the creation, attachment, perfection, or enforcement of a security interest does not materially impair the lessee’s prospect of obtaining return performance or change their duties, burden, or risk, unless it results in a delegation of material performance by the lessor.
Whom does it apply to?
Parties involved in lease agreements and security interests in leasehold interests or lessor's residual interest in goods
What does it govern?
Restrictions on creation or enforcement of security interest in leasehold interest or in lessors residual interest
What are exemptions?
Exceptions are provided in subsection 2 and section 554.13303, subsection 7
What are the Penalties?
No specific penalties mentioned
Jurisdiction
Iowa