{"data":{"id":"us-nj/n.j.-stat.-12a-9-207","jurisdiction":"us-nj","citation":"N.J. Stat. § 12A:9-207","heading":"Rights and duties of secured party having possession or control of collateral.","body":"Rights and Duties of Secured Party Having Possession or Control of Collateral.\n(a)\tDuty of care when secured party in possession.  Except as otherwise provided in subsection (d), a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession.  In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.\n(b)\tExpenses, risks, duties, and rights when secured party in possession.  Except as otherwise provided in subsection (d), if a secured party has possession of collateral:\n(1)\treasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use or operation of the collateral are chargeable to the debtor and are secured by the collateral;\n(2)\tthe risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage;\n(3)\tthe secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and\n(4)\tthe secured party may use or operate the collateral:\n(A)\tfor the purpose of preserving the collateral or its value;\n(B)\tas permitted by an order of a court having competent jurisdiction; or\n(C)\texcept in the case of consumer goods, in the manner and to the extent agreed by the debtor.\n(c)\tDuties and rights when secured party in possession or control. Except as otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under 12A:7-106, 12A:9-104, 12A:9-105, 12A:9-106, or 12A:9-107:\n(1)\tmay hold as additional security any proceeds, except money or funds, received from the collateral;\n(2)\tshall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor; and\n(3)\tmay create a security interest in the collateral.\n(d)\tBuyer of certain rights to payment.  If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor:\n(1)\tsubsection (a) does not apply unless the secured party is entitled under an agreement:\n(A)\tto charge back uncollected collateral; or\n(B)\totherwise to full or limited recourse against the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and\n(2)\tsubsections (b) and (c) do not apply.\nL.2001, c.117, s.1; amended 2001, c.386, ss.13, 14; 2013, c.65, s.6.","path":["TITLE 12A COMMERCIAL TRANSACTIONS"],"source_url":"https://pub.njleg.state.nj.us/statutes/STATUTES-TEXT.zip","current_through":"P.L.2025, c.405, and J.R.22","vintage":"","retrieved_at":"2026-08-27T17:54:13Z","sha256":"98a1430d12a479dfc5277eb78eee95acd7243b07239f3b33430279180e3f3c17","source_id":"us-nj","stale":true,"prev":"us-nj/n.j.-stat.-12a-9-206","next":"us-nj/n.j.-stat.-12a-9-208"},"notice":"GroundRules: Original legal text. Not legal advice."}