Effective date note
NOTE: Subd. 1. is amended eff. 7-1-13 by
2011 Wis. Act 206 to read:
Effective date text
1. A default has occurred with respect to the obligation secured by the mortgage; and
409.607(2)(b)2.
2. The secured party is entitled to enforce the mortgage nonjudicially.
409.607(3)
(3) Commercially reasonable collection and enforcement. A secured party shall proceed in a commercially reasonable manner if the secured party:
409.607(3)(a)
(a) Undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and
409.607(3)(b)
(b) Is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.
409.607(4)
(4) Expenses of collection and enforcement. A secured party may deduct from the collections made pursuant to
sub. (3) reasonable expenses of collection and enforcement, including reasonable attorney fees and legal expenses incurred by the secured party.
409.607(5)
(5) Duties to secured party not affected. This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.
409.607 History
History: 2001 a. 10;
2011 a. 206.
409.608
409.608
Application of proceeds of collection or enforcement; liability for deficiency and right to surplus. 409.608(1)(1)
Application of proceeds, surplus, and deficiency if obligation secured. If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:
409.608(1)(a)
(a) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under
s. 409.607 in the following order to:
409.608(1)(a)1.
1. The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;
409.608(1)(a)2.
2. The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and
409.608(1)(a)3.
3. The satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed.
409.608(1)(b)
(b) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under
par. (a) 3.
409.608(1)(c)
(c) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under
s. 409.607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
409.608(1)(d)
(d) A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.
409.608(2)
(2) No surplus or deficiency in sales of certain rights to payment. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.
409.608 History
History: 2001 a. 10.
409.608 Annotation
Attorney fees under [former] sub. (1) (a) relates to attorney fees incurred in liquidating collateral, not in a suit on a promissory note. Kohlenberg v. American Plumbing Supply Co.
82 Wis. 2d 384,
263 N.W.2d 496 (1974).
409.608 Note
NOTE: The above annotated materials cite to the pre-
2001 Wis. Act 10 version of ch. 409.
409.609
409.609
Secured party's right to take possession after default. 409.609(1)(1)
Possession; rendering equipment unusable; disposition on debtor's premises. After default, a secured party:
409.609(1)(b)
(b) Without removal, may render equipment unusable and dispose of collateral on a debtor's premises under
s. 409.610.
409.609(2)
(2) Judicial and nonjudicial process. A secured party may proceed under
sub. (1):
409.609(2)(b)
(b) Without judicial process, if it proceeds without breach of the peace.
409.609(3)
(3) Assembly of collateral. If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.
409.609 History
History: 2001 a. 10.
409.610
409.610
Disposition of collateral after default. 409.610(1)
(1)
Disposition after default. After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.
409.610(2)
(2) Commercially reasonable disposition. Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.
409.610(3)
(3) Purchase by secured party. A secured party may purchase collateral:
409.610(3)(b)
(b) At a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.
409.610(4)
(4) Warranties on disposition. A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.
409.610(5)
(5) Disclaimer of warranties. A secured party may disclaim or modify warranties under
sub. (4):
409.610(5)(a)
(a) In a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or
409.610(5)(b)
(b) By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.
409.610(6)
(6) Record sufficient to disclaim warranties. A record is sufficient to disclaim warranties under
sub. (5) if it indicates "There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition" or uses words of similar import.
409.610 History
History: 2001 a. 10.
409.610 Annotation
The burden of proving that a private sale was commercially reasonable is on the seller. Proof that the sale was made at the wholesale price does not establish reasonableness. Vic Hansen & Sons, Inc. v. Crowley,
57 Wis. 2d 106,
203 N.W.2d 728 (1973).
409.610 Annotation
The primary focus of commercial reasonableness is not the proceeds from a sale, but procedures employed for the sale. Appleton State Bank v. Van Dyke Ford, Inc.
90 Wis. 2d 200,
279 N.W.2d 443 (1979).
409.610 Annotation
The conduct of a debtor may be taken into account in determining the commercial reasonableness of a sale. First National Bank of Kenosha v. Hinrichs,
90 Wis. 2d 214,
279 N.W.2d 449 (1979).
409.610 Annotation
A secured creditor can retain a debtor's collateral while seeking an independent action for a money judgment. Dorman v. Morris,
185 Wis. 2d 845,
519 N.W.2d 685 (Ct. App. 1994).
409.610 Note
NOTE: The above annotated materials cite to the pre-
2001 Wis. Act 10 version of ch. 409.
409.611
409.611
Notification before disposition of collateral. 409.611(1)(1)
Notification date. In this section, "notification date" means the earlier of the date on which:
409.611(1)(a)
(a) A secured party sends to the debtor and any secondary obligor an authenticated notification of disposition; or
409.611(1)(b)
(b) The debtor and any secondary obligor waive the right to notification.
409.611(2)
(2) Notification of disposition required. Except as otherwise provided in
sub. (4), a secured party that disposes of collateral under
s. 409.610 shall send to the persons specified in
sub. (3) a reasonable, authenticated notification of disposition.
409.611(3)
(3) Persons to be notified. To comply with
sub. (2), the secured party shall send an authenticated notification of disposition to:
409.611(3)(c)
(c) If the collateral is other than consumer goods:
409.611(3)(c)1.
1. Any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;
409.611(3)(c)2.
2. Any other secured party or lienholder that, 10 days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:
409.611(3)(c)2.c.
c. Was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date; and
409.611(3)(c)3.
3. Any other secured party that, 10 days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in
s. 409.311 (1).
409.611(4)
(4) Subsection (2) inapplicable: perishable collateral; recognized market. Subsection (2) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.
409.611(5)
(5) Compliance with sub. (3) (c) 2. A secured party complies with the requirement for notification prescribed by
sub. (3) (c) 2. if:
409.611(5)(a)
(a) Not later than 20 days or earlier than 30 days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in
sub. (3) (c) 2.; and
409.611(5)(b)
(b) Before the notification date, the secured party:
409.611(5)(b)1.
1. Did not receive a response to the request for information; or
409.611(5)(b)2.
2. Received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.
409.611 History
History: 2001 a. 10.
409.612
409.612
Timeliness of notification before disposition of collateral. 409.612(1)(1)
Reasonable time is question of fact. Except as otherwise provided in
sub. (2), whether a notification is sent within a reasonable time is a question of fact.
409.612(2)
(2) Ten-day period sufficient in nonconsumer transaction. In a transaction other than a consumer transaction, a notification of disposition sent after default and 10 days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.
409.612 History
History: 2001 a. 10.
409.613
409.613
Contents and form of notification before disposition of collateral: general. Except in a consumer-goods transaction, the following rules apply:
409.613(1)
(1) Notification: when sufficient. The contents of a notification of disposition are sufficient if the notification:
409.613(1)(b)
(b) Describes the collateral that is the subject of the intended disposition;
409.613(1)(d)
(d) States that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and
409.613(1)(e)
(e) States the time and place of a public disposition or the time after which any other disposition is to be made.
409.613(2)
(2) Notification: question of fact. Whether the contents of a notification that lacks any of the information specified in
sub. (1) are nevertheless sufficient is a question of fact.
409.613(3)
(3) Notification: other information or minor errors. The contents of a notification providing substantially the information specified in
sub. (1) are sufficient, even if the notification includes:
409.613(3)(b)
(b) Minor errors that are not seriously misleading.
409.613(4)
(4) Substantial compliance. A particular phrasing of the notification is not required.
409.613(5)
(5) Notification: form sufficient. The following form of notification and the form appearing in
s. 409.614 (3), when completed, each provide sufficient information:
NOTIFICATION OF DISPOSITION OF COLLATERAL
