Article 9 — Secured Transactions · Section 9-316
An overview of UCC § 9-316, dealing with the treatment of accounts and proceeds in secured transactions.
Source: U.C.C. § 9-316
A security interest continues in collateral notwithstanding sale, lease, license, exchange, or other disposition, and continues in identifiable proceeds of collateral.
UCC § 9-316 provides that a secured party retains a security interest in collateral even if that collateral is sold or otherwise disposed of. This section also ensures that the secured party's interest can extend to identifiable proceeds that result from the disposition of the collateral.
The property that is subject to a security interest.
Cash or other property received as a result of the sale or other disposition of collateral.
A legal claim on collateral that secures the performance or payment of an obligation.
Example 1
A debtor sells inventory to a third party, but the secured party still has an interest in the proceeds of that sale.
Example 2
In a lease agreement, even if the leased equipment is subleased, the secured party's interest may follow to the payment received from that sublease.