Chapter 409

409.622(2) (2) Discharge of subordinate interest notwithstanding noncompliance. A subordinate interest is discharged or terminated under sub. (1), even if the secured party fails to comply with this chapter.

409.622 History History: 2001 a. 10.

409.623 409.623 Right to redeem collateral.

409.623(1) (1) Persons that may redeem. A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral.

409.623(2) (2) Requirements for redemption. To redeem collateral, a person shall tender:

409.623(2)(a) (a) Fulfillment of all obligations secured by the collateral; and

409.623(2)(b) (b) The reasonable expenses and attorney fees described in s. 409.615 (1) (a).

409.623(3) (3) When redemption may occur. A redemption may occur at any time before a secured party:

409.623(3)(a) (a) Has collected collateral under s. 409.607;

409.623(3)(b) (b) Has disposed of collateral or entered into a contract for its disposition under s. 409.610; or

409.623(3)(c) (c) Has accepted collateral in full or partial satisfaction of the obligation it secures under s. 409.622.

409.623 History History: 2001 a. 10.

409.624 409.624 Waiver.

409.624(1) (1) Waiver of disposition notification. A debtor or secondary obligor may waive the right to notification of disposition of collateral under s. 409.611 only by an agreement to that effect entered into and authenticated after default.

409.624(2) (2) Waiver of mandatory disposition. A debtor may waive the right to require disposition of collateral under s. 409.620 (5) only by an agreement to that effect entered into and authenticated after default.

409.624(3) (3) Waiver of redemption right. Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under s. 409.623 only by an agreement to that effect entered into and authenticated after default.

409.624 History History: 2001 a. 10.

409.625 409.625 Remedies for secured party’s failure to comply with chapter.

409.625(1) (1) Judicial orders concerning noncompliance. If it is established that a secured party is not proceeding in accordance with this chapter, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.

409.625(2) (2) Damages for noncompliance. Subject to subs. (3) and (4), a person is liable for damages in the amount of any loss caused by a failure to comply with this chapter. Loss caused by a failure to comply may include loss resulting from the debtor’s inability to obtain, or increased costs of, alternative financing.

409.625(3) (3) Persons entitled to recover damages; statutory damages if collateral is consumer goods. Except as otherwise provided in s. 409.628:

409.625(3)(a) (a) A person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under sub. (2) for its loss; and

409.625(3)(b) (b) If the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this subchapter may recover for that failure in any event an amount not less than the credit service charge plus 10 percent of the principal amount of the obligation or the time-price differential plus 10 percent of the cash price.

409.625(4) (4) Recovery when deficiency eliminated or reduced. A debtor whose deficiency is eliminated under s. 409.626 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under s. 409.626 may not otherwise recover under sub. (2) for noncompliance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance.

409.625(7) (7) Limitation of security interest: noncompliance with s. 409.210. If a secured party fails to comply with a request regarding a list of collateral or a statement of account under s. 409.210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.

409.625 History History: 2001 a. 10; 2011 a. 206.

409.626 409.626 Action in which deficiency or surplus is in issue.

409.626(1) (1) Applicable rules if amount of deficiency or surplus in issue. In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

409.626(1)(a) (a) A secured party need not prove compliance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party’s compliance in issue.

409.626(1)(b) (b) If the secured party’s compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this subchapter.

409.626(1)(c) (c) Except as otherwise provided in s. 409.628, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney fees exceeds the greater of:

409.626(1)(c)1. 1. The proceeds of the collection, enforcement, disposition, or acceptance; or

409.626(1)(c)2. 2. The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance.

409.626(1)(d) (d) For purposes of par. (c) 2., the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney fees unless the secured party proves that the amount is less than that sum.

409.626(1)(e) (e) If a deficiency or surplus is calculated under s. 409.615 (6), the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

409.626(2) (2) Nonconsumer transactions; no inference. The limitation of the rules in sub. (1) to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions. The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches.

409.626 History History: 2001 a. 10.

409.627 409.627 Determination of whether conduct was commercially reasonable.

409.627(1) (1) Greater amount obtainable under other circumstances; no preclusion of commercial reasonableness. The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner.

409.627(2) (2) Dispositions that are commercially reasonable. A disposition of collateral is made in a commercially reasonable manner if the disposition is made:

409.627(2)(a) (a) In the usual manner on any recognized market;

409.627(2)(b) (b) At the price current in any recognized market at the time of the disposition; or

409.627(2)(c) (c) Otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

409.627(3) (3) Approval by court or on behalf of creditors. A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved:

409.627(3)(a) (a) In a judicial proceeding;

409.627(3)(b) (b) By a bona fide creditors’ committee;

409.627(3)(c) (c) By a representative of creditors; or

409.627(3)(d) (d) By an assignee for the benefit of creditors.

409.627(4) (4) Approval under sub. (3) not necessary; absence of approval has no effect. Approval under sub. (3) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.

409.627 History History: 2001 a. 10.

409.628 409.628 Nonliability and limitation on liability of secured party; liability of secondary obligor.

409.628(1) (1) Limitation of liability of secured party for noncompliance with chapter. 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:

409.628(1)(a) (a) 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 chapter; and

409.628(1)(b) (b) The secured party’s failure to comply with this chapter does not affect the liability of the person for a deficiency.

409.628(2) (2) Limitation of liability based on status as secured party. A secured party is not liable because of its status as secured party:

409.628(2)(a) (a) To a person that is a debtor or obligor, unless the secured party knows:

409.628(2)(a)1. 1. That the person is a debtor or obligor;

409.628(2)(a)2. 2. The identity of the person; and

409.628(2)(a)3. 3. How to communicate with the person; or

409.628(2)(b) (b) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

409.628(2)(b)1. 1. That the person is a debtor; and

409.628(2)(b)2. 2. The identity of the person.

409.628(3) (3) 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:

409.628(3)(a) (a) A debtor’s representation concerning the purpose for which collateral was to be used, acquired, or held; or

409.628(3)(b) (b) An obligor’s representation concerning the purpose for which a secured obligation was incurred.

409.628(4) (4) Limitation of liability for statutory damages. A secured party is not liable to any person under s. 409.625 (3) (b) for its failure to comply with s. 409.616.

409.628(5) (5) Limitation of multiple liability for statutory damages. A secured party is not liable under s. 409.625 (3) (b) more than once with respect to any one secured obligation.

409.628 History History: 2001 a. 10.

subch. VII of ch. 409 SUBCHAPTER VII

TRANSITION

409.702 409.702 Savings clause.

409.702(1) (1) Preeffective-date transactions or liens. Except as otherwise provided in this subchapter, 2001 Wisconsin Act 10 applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before July 1, 2001.

409.702(2) (2) Continuing validity. Except as otherwise provided in sub. (3) and ss. 409.703 to 409.709:

409.702(2)(a) (a) Transactions and liens that were not governed by ch. 409, 1999 stats., were validly entered into or created before July 1, 2001, and would be subject to 2001 Wisconsin Act 10 if they had been entered into or created on or after July 1, 2001, and the rights, duties, and interests flowing from those transactions and liens remain valid on and after July 1, 2001; and

409.702(2)(b) (b) The transactions and liens may be terminated, completed, consummated, and enforced as required or permitted by 2001 Wisconsin Act 10 or by the law that otherwise would apply if this paragraph had not taken effect.

409.702(3) (3) Preeffective-date proceedings. 2001 Wisconsin Act 10 does not affect an action, case, or proceeding commenced before July 1, 2001.

409.702 History History: 2001 a. 10.

409.703 409.703 Security interest perfected before effective date.

409.703(1) (1) Continuing priority over lien creditor: perfection requirements satisfied. A security interest that is enforceable immediately before July 1, 2001, and would have priority over the rights of a person that becomes a lien creditor at that time is a perfected security interest under 2001 Wisconsin Act 10 if, on July 1, 2001, the applicable requirements for enforceability and perfection under 2001 Wisconsin Act 10 are satisfied without further action.

409.703(2) (2) Continuing priority over lien creditor: perfection requirements not satisfied. Except as otherwise provided in s. 409.705, if, immediately before July 1, 2001, a security interest is enforceable and would have priority over the rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under 2001 Wisconsin Act 10 are not satisfied as of July 1, 2001, the security interest:

409.703(2)(a) (a) Is a perfected security interest until one year after July 1, 2001;

409.703(2)(b) (b) Remains enforceable on and after one year after July 1, 2001, only if the security interest becomes enforceable under s. 409.203 before one year after July 1, 2001; and

409.703(2)(c) (c) Remains perfected on and after one year after July 1, 2001, only if the applicable requirements for perfection under 2001 Wisconsin Act 10 are satisfied before one year after July 1, 2001.

409.703 History History: 2001 a. 10.

409.704 409.704 Security interest unperfected before effective date. A security interest that is enforceable immediately before July 1, 2001, but which would be subordinate to the rights of a person that becomes a lien creditor at that time:

409.704(1) (1) Remains an enforceable security interest for one year after July 1, 2001;

409.704(2) (2) Remains enforceable on and after one year after July 1, 2001, if the security interest becomes enforceable under s. 409.203 on July 1, 2001, or within one year thereafter; and

409.704(3) (3) Becomes perfected:

409.704(3)(a) (a) Without further action, on July 1, 2001, if the applicable requirements for perfection under 2001 Wisconsin Act 10 are satisfied before or at that time; or