AB111,167,7 4409.615 Application of proceeds of disposition; liability for deficiency
5and right to surplus. (1)
Application of proceeds. A secured party shall apply
6or pay over for application the cash proceeds of disposition under s. 409.610 in the
7following order to:
AB111,167,118 (a) The reasonable expenses of retaking, holding, preparing for disposition,
9processing, and disposing of, and, to the extent provided for by agreement and not
10prohibited by law, reasonable attorney fees and legal expenses incurred by the
11secured party;
AB111,167,1312 (b) The satisfaction of obligations secured by the security interest or
13agricultural lien under which the disposition is made;
AB111,167,1514 (c) The satisfaction of obligations secured by any subordinate security interest
15in or other subordinate lien on the collateral if:
AB111,167,1816 1. The secured party receives from the holder of the subordinate security
17interest or other lien an authenticated demand for proceeds before distribution of the
18proceeds is completed; and
AB111,167,2119 2. In a case in which a consignor has an interest in the collateral, the
20subordinate security interest or other lien is senior to the interest of the consignor;
21and
AB111,167,2422 (d) A secured party that is a consignor of the collateral if the secured party
23receives from the consignor an authenticated demand for proceeds before
24distribution of the proceeds is completed.
AB111,168,4
1(2) Proof of subordinate interest. If requested by a secured party, a holder
2of a subordinate security interest or other lien shall furnish reasonable proof of the
3interest or lien within a reasonable time. Unless the holder does so, the secured party
4need not comply with the holder's demand under sub. (1) (c).
AB111,168,9 5(3) Application of noncash proceeds. A secured party need not apply or pay
6over for application noncash proceeds of disposition under s. 409.610 unless the
7failure to do so would be commercially unreasonable. A secured party that applies
8or pays over for application noncash proceeds shall do so in a commercially
9reasonable manner.
AB111,168,12 10(4) Surplus or deficiency if obligation secured. If the security interest under
11which a disposition is made secures payment or performance of an obligation, after
12making the payments and applications required by sub. (1) and permitted by sub. (3):
AB111,168,1513 (a) Unless sub. (1) (d) requires the secured party to apply or pay over cash
14proceeds to a consignor, the secured party shall account to and pay a debtor for any
15surplus; and
AB111,168,1616 (b) The obligor is liable for any deficiency.
AB111,168,19 17(5) No surplus or deficiency in sales of certain rights to payment. If the
18underlying transaction is a sale of accounts, chattel paper, payment intangibles, or
19promissory notes:
AB111,168,2020 (a) The debtor is not entitled to any surplus; and
AB111,168,2121 (b) The obligor is not liable for any deficiency.
AB111,169,2 22(6) Calculation of surplus or deficiency in disposition to person related to
23secured party.
The surplus or deficiency following a disposition is calculated based
24on the amount of proceeds that would have been realized in a disposition complying

1with this subchapter to a transferee other than the secured party, a person related
2to the secured party or a secondary obligor if:
AB111,169,43 (a) The transferee in the disposition is the secured party, a person related to
4the secured party, or a secondary obligor; and
AB111,169,75 (b) The amount of proceeds of the disposition is significantly below the range
6of proceeds that a complying disposition to a person other than the secured party, a
7person related to the secured party, or a secondary obligor would have brought.
AB111,169,12 8(7) Cash proceeds received by junior secured party. A secured party that
9receives cash proceeds of a disposition in good faith and without knowledge that the
10receipt violates the rights of the holder of a security interest or other lien that is not
11subordinate to the security interest or agricultural lien under which the disposition
12is made:
AB111,169,1313 (a) Takes the cash proceeds free of the security interest or other lien;
AB111,169,1514 (b) Is not obligated to apply the proceeds of the disposition to the satisfaction
15of obligations secured by the security interest or other lien; and
AB111,169,1716 (c) Is not obligated to account to or pay the holder of the security interest or
17other lien for any surplus.
AB111,169,19 18409.616 Explanation of calculation of surplus or deficiency. (1)
19Definitions. In this section:
AB111,169,2020 (a) "Explanation" means a writing that:
AB111,169,2121 1. States the amount of the surplus or deficiency;
AB111,169,2322 2. Provides an explanation in accordance with sub. (3) of how the secured party
23calculated the surplus or deficiency;
AB111,170,3
13. States, if applicable, that future debits, credits, charges, including additional
2credit service charges or interest, rebates, and expenses may affect the amount of the
3surplus or deficiency; and
AB111,170,54 4. Provides a telephone number or mailing address from which additional
5information concerning the transaction is available.
AB111,170,66 (b) "Request" means a record:
AB111,170,77 1. Authenticated by a debtor or consumer obligor;
AB111,170,88 2. Requesting that the recipient provide an explanation; and
AB111,170,99 3. Sent after disposition of the collateral under s. 409.610.
AB111,170,12 10(2) Explanation of calculation. In a consumer-goods transaction in which
11the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under
12s. 409.615, the secured party shall:
AB111,170,1413 (a) Send an explanation to the debtor or consumer obligor, as applicable, after
14the disposition and:
AB111,170,1715 1. Before or when the secured party accounts to the debtor and pays any surplus
16or first makes written demand on the consumer obligor after the disposition for
17payment of the deficiency; and
AB111,170,1818 2. Within 14 days after receipt of a request; or
AB111,170,2119 (b) In the case of a consumer obligor who is liable for a deficiency, within 14 days
20after receipt of a request, send to the consumer obligor a record waiving the secured
21party's right to a deficiency.
AB111,170,23 22(3) Required information. To comply with sub. (1) (a) 2., a writing must provide
23the following information in the following order:
AB111,171,224 (a) The aggregate amount of obligations secured by the security interest under
25which the disposition was made, and, if the amount reflects a rebate of unearned

1interest or credit service charge, an indication of that fact, calculated as of a specified
2date:
AB111,171,53 1. If the secured party takes or receives possession of the collateral after
4default, not more than 35 days before the secured party takes or receives possession;
5or
AB111,171,86 2. If the secured party takes or receives possession of the collateral before
7default or does not take possession of the collateral, not more than 35 days before the
8disposition;
AB111,171,99 (b) The amount of proceeds of the disposition;
AB111,171,1110 (c) The aggregate amount of the obligations after deducting the amount of
11proceeds;
AB111,171,1512 (d) The amount, in the aggregate or by type, and types of expenses, including
13expenses of retaking, holding, preparing for disposition, processing, and disposing
14of the collateral, and attorney fees secured by the collateral which are known to the
15secured party and relate to the current disposition;
AB111,171,1816 (e) The amount, in the aggregate or by type, and types of credits, including
17rebates of interest or credit service charges, to which the obligor is known to be
18entitled and which are not reflected in the amount in par. (a); and
AB111,171,1919 (f) The amount of the surplus or deficiency.
AB111,171,22 20(4) Substantial compliance. A particular phrasing of the explanation is not
21required. An explanation complying substantially with the requirements of sub. (1)
22is sufficient, even if it includes minor errors that are not seriously misleading.
AB111,172,2 23(5) Charges for responses. A debtor or consumer obligor is entitled without
24charge to one response to a request under this section during any 6-month period in
25which the secured party did not send to the debtor or consumer obligor an

1explanation pursuant to sub. (2) (a). The secured party may require payment of a
2charge not exceeding $25 for each additional response.
AB111,172,4 3409.617 Rights of transferee of collateral. (1) Effects of disposition. A
4secured party's disposition of collateral after default:
AB111,172,55 (a) Transfers to a transferee for value all of the debtor's rights in the collateral;
AB111,172,66 (b) Discharges the security interest under which the disposition is made; and
AB111,172,87 (c) Discharges any subordinate security interest or other subordinate lien other
8than liens held by this state or a local governmental unit, as defined in s. 19.42 (7u).
AB111,172,11 9(2) Rights of good-faith transferee. A transferee that acts in good faith takes
10free of the rights and interests described in sub. (1), even if the secured party fails
11to comply with this chapter or the requirements of any judicial proceeding.
AB111,172,13 12(3) Rights of other transferee. If a transferee does not take free of the rights
13and interests described in sub. (1), the transferee takes the collateral subject to:
AB111,172,1414 (a) The debtor's rights in the collateral;
AB111,172,1615 (b) The security interest or agricultural lien under which the disposition is
16made; and
AB111,172,1717 (c) Any other security interest or other lien.
AB111,172,20 18409.618 Rights and duties of certain secondary obligors. (1) Rights and
19duties of secondary obligor.
A secondary obligor acquires the rights and becomes
20obligated to perform the duties of the secured party after the secondary obligor:
AB111,172,2121 (a) Receives an assignment of a secured obligation from the secured party;
AB111,172,2322 (b) Receives a transfer of collateral from the secured party and agrees to accept
23the rights and assume the duties of the secured party; or
AB111,172,2424 (c) Is subrogated to the rights of a secured party with respect to collateral.
AB111,173,2
1(2) Effect of assignment, transfer, or subrogation. An assignment, transfer,
2or subrogation described in sub. (1):
AB111,173,33 (a) Is not a disposition of collateral under s. 409.610; and
AB111,173,44 (b) Relieves the secured party of further duties under this chapter.
AB111,173,7 5409.619 Transfer of record or legal title. (1) Transfer statement. In this
6section, "transfer statement" means a record authenticated by a secured party
7stating:
AB111,173,98 (a) That the debtor has defaulted in connection with an obligation secured by
9specified collateral;
AB111,173,1110 (b) That the secured party has exercised its postdefault remedies with respect
11to the collateral;
AB111,173,1312 (c) That, by reason of the exercise, a transferee has acquired the rights of the
13debtor in the collateral; and
AB111,173,1414 (d) The name and mailing address of the secured party, debtor, and transferee.
AB111,173,20 15(2) Effect of transfer statement. A transfer statement entitles the transferee
16to the transfer of record of all rights of the debtor in the collateral specified in the
17statement in any official filing, recording, registration, or certificate-of-title system
18covering the collateral. If a transfer statement is presented with the applicable fee
19and request form to the official or office responsible for maintaining the system, the
20official or office shall:
AB111,173,2121 (a) Accept the transfer statement;
AB111,173,2222 (b) Promptly amend its records to reflect the transfer; and
AB111,173,2423 (c) If applicable, issue a new appropriate certificate of title in the name of the
24transferee.
AB111,174,4
1(3) Transfer not a disposition; no relief of secured party's duties. A transfer
2of the record or legal title to collateral to a secured party under sub. (2) or otherwise
3is not of itself a disposition of collateral under this chapter and does not of itself
4relieve the secured party of its duties under this chapter.
AB111,174,9 5409.620 Acceptance of collateral in full or partial satisfaction of
6obligation; compulsory disposition of collateral. (1)
Conditions to
7acceptance in satisfaction.
Except as otherwise provided in sub. (7), a secured party
8may accept collateral in full or partial satisfaction of the obligation it secures only
9if:
AB111,174,1010 (a) The debtor consents to the acceptance under sub. (3);
AB111,174,1211 (b) The secured party does not receive, within the time set forth in sub. (4), a
12notification of objection to the proposal authenticated by:
AB111,174,1413 1. A person to which the secured party was required to send a proposal under
14s. 409.621; or
AB111,174,1615 2. Any other person, other than the debtor, holding an interest in the collateral
16subordinate to the security interest that is the subject of the proposal;
AB111,174,1817 (c) If the collateral is consumer goods, the collateral is not in the possession of
18the debtor when the debtor consents to the acceptance; and
AB111,174,2019 (d) Subsection (5) does not require the secured party to dispose of the collateral
20or the debtor waives the requirement pursuant to s. 409.624.
AB111,174,22 21(2) Purported acceptance ineffective. A purported or apparent acceptance
22of collateral under this section is ineffective unless:
AB111,174,2423 (a) The secured party consents to the acceptance in an authenticated record or
24sends a proposal to the debtor; and
AB111,174,2525 (b) The conditions of sub. (1) are met.
AB111,175,1
1(3) Debtor's consent. For purposes of this section:
AB111,175,42 (a) A debtor consents to an acceptance of collateral in partial satisfaction of the
3obligation it secures only if the debtor agrees to the terms of the acceptance in a
4record authenticated after default; and
AB111,175,75 (b) A debtor consents to an acceptance of collateral in full satisfaction of the
6obligation it secures only if the debtor agrees to the terms of the acceptance in a
7record authenticated after default or the secured party:
AB111,175,108 1. Sends to the debtor after default a proposal that is unconditional or subject
9only to a condition that collateral not in the possession of the secured party be
10preserved or maintained;
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