{"data":{"id":"us-nm/55-9-340","jurisdiction":"us-nm","citation":"55-9-340","heading":"Effectiveness of right of recoupment or set-off against deposit account.","body":"(a) Except as otherwise provided in Subsection (c) of this section, a bank with which a deposit account is maintained may exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account.\n(b) Except as otherwise provided in Subsection (c) of this section, the application of Chapter 55, Article 9 NMSA 1978 to a security interest in a deposit account does not affect a right of recoupment or set-off of the secured party as to a deposit account maintained with the secured party.\n(c) The exercise by a bank of a set-off against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under Paragraph (3) of Subsection (a) of Section 55-9-104 NMSA 1978, if the set-off is based on a claim against the debtor.\nOFFICIAL COMMENTS\nUCC Official Comments © by ALI \u0026 the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.\n1. Source. New; subsection (b) is based on a nonuniform Illinois amendment.\n2. Set-off vs. Security Interest. This section resolves the conflict between a security interest in a deposit account and the bank's rights of recoupment and set-off.\nSubsection (a) states the general rule and provides that the bank may effectively exercise rights of recoupment and set-off against the secured party. Subsection (c) contains an exception: If the secured party has control under section 9-104(a)(3) (i.e., if it has become the bank's customer), then any set-off exercised by the bank against a debt owed by the debtor (as opposed to a debt owed to the bank by the secured party) is ineffective. The bank may, however, exercise its recoupment rights effectively. This result is consistent with the priority rule in section 9-327(4), under which the security interest of a bank in a deposit account is subordinate to that of a secured party who has control under section 9-104(a)(3).\nThis section deals with rights of set-off and recoupment that a bank may have under other law. It does not create a right of set-off or recoupment, nor is it intended to override any limitations or restrictions that other law imposes on the exercise of those rights.\n3. Preservation of Set-Off Right. Subsection (b) makes clear that a bank may hold both a right of set-off against, and an article 9 security interest in, the same deposit account. By holding a security interest in a deposit account, a bank does not impair any right of set-off it would otherwise enjoy. This subsection does not pertain to accounts evidenced by an instrument (e.g., certain certificates of deposit), which are excluded from the definition of \"deposit accounts.\"","path":["Chapter 55 - Uniform Commercial Code","ARTICLE 9 Secured Transactions"],"source_url":"https://nmonesource.com/nmos/nmsa-unanno/en/item/18558/index.do","current_through":"2024-04-27","vintage":"","retrieved_at":"2026-09-03T15:02:20Z","sha256":"ec12ed1dc4024dcfbf0fffd876e0d87b59f582b3af2537b14a6b2f61dc91915e","source_id":"us-nm","stale":false,"prev":"us-nm/55-9-339","next":"us-nm/55-9-341"},"notice":"GroundRules: Original legal text. Not legal advice."}