(a) This section applies to cases in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations or otherwise give value. (b) Within ten days after receiving a signed demand by the debtor: (1) a secured party having control of a deposit account under Paragraph (2) of Subsection (a) of Section 55-9-104 NMSA 1978 shall send to the bank with which the deposit account is maintained a signed document that releases the bank from any further obligation to comply with instructions originated by the secured party; (2) a secured party having control of a deposit account under Paragraph (3) of Subsection (a) of Section 55-9-104 NMSA 1978 shall: (A) pay the debtor the balance on deposit in the deposit account; or (B) transfer the balance on deposit into a deposit account in the debtor's name; (3) a secured party, other than a buyer, having control under Section 55-9-105 NMSA 1978 of an authoritative electronic copy of a record evidencing chattel paper shall transfer control of the electronic copy to the debtor or a person designated by the debtor; (4) a secured party having control of investment property under Paragraph (2) of Subsection (d) of Section 55-8-106 NMSA 1978 or Subsection (b) of Section 55-9-106 NMSA 1978 shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained a signed record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party; (5) a secured party having control of a letter-of-credit right under Section 55-9-107 NMSA 1978 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party a signed release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party; (6) a secured party having control under Section 55-7-106 NMSA 1978 of an authoritative electronic copy of an electronic document of title shall transfer control of the electronic copy to the debtor or a person designated by the debtor; (7) a secured party having control under Section 55-9-105A NMSA 1978 of electronic money shall transfer control of the electronic money to the debtor or a person designated by the debtor; and (8) a secured party having control under Section 55-12-105 NMSA 1978 of a controllable electronic record, other than a buyer of a controllable account or controllable payment intangible evidenced by the controllable electronic record, shall transfer control of the controllable electronic record to the debtor or a person designated by the debtor. History: 1978 Comp., § 55-9-208, enacted by Laws 2001, ch. 139, § 18; 2005, ch. 144, § 97; 2023, ch. 142, § 53. OFFICIAL COMMENTS UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. Source. New. 2. Scope and Purpose. This section imposes duties on a secured party who has control of a deposit account, an electronic copy of a record evidencing chattel paper, investment property, a letter-of-credit right, an electronic document of title, electronic money, or a controllable electronic record. The duty to terminate the secured party's control is analogous to the duty to file a termination statement, imposed by Section 9-513 [55-9-513 NMSA 1978]. Under Subsection (a), it applies only when there is no outstanding secured obligation and the secured party is not committed to give value. The requirements of this section can be varied by agreement under Section 1-102(3) [55-1-102 NMSA 1978]. For example, a debtor could by contract agree that the secured party may comply with subsection (b) by releasing control more than 10 days after demand. Also, duties under this section should not be read to conflict with the terms of the collateral itself. For example, if the collateral is a time deposit account, Subsection (b)(2) should not require a secured party with control to make an early withdrawal of the funds (assuming that were possible) in order to pay them over to the debtor or put them in an account in the debtor's name. Note that Subsection (b)(8) addresses secured parties that have control of a controllable electronic record. That control may have been obtained for the purpose of perfecting a security interest in a controllable account or controllable payment intangible evidenced by the controllable electronic record, even if the secured party did not have a security interest in the controllable electronic record itself. This section does not explicitly impose duties on a secured party whose control is based on the acknowledgment under Section 7-106(g) [55-7-106 NMSA 1978], 9-104(a)(4) [55-9-104 NMSA 1978], or 9-105A(e) [55-9-105 NMSA 1978] or under 9-107A [55-9-107 NMSA 1978] and 12-105(e) [55-12-105 NMSA 1978]by another person having control. Such a secured party would have control only while the other, acknowledging person retains control. This result necessarily follows because such a secured party's control derives solely from the other person's continued control. See, e.g. , Section 9-314 [55-9-314 NMSA 1978], Comment 2. Upon compliance with this section by an acknowledging person having control, the control of a person having control through such person's acknowledgment would cease. 3. Remedy for Failure to Relinquish Control. If a secured party fails to comply with the requirements of subsection (b), the debtor has the remedy set forth in Section 9-625(e) [55-9-625 NMSA 1978]. This remedy is identical to that applicable to failure to provide or file a termination statement under Section 9-513 [55-9-513 NMSA 1978]. 4. Duty to Relinquish Possession. Although Section 9-207 [55-9-207 NMSA 1978] addresses directly the duties of a secured party in possession of collateral, that section does not require the secured party to relinquish possession when the secured party ceases to hold a security interest. Under common law, absent agreement to the contrary, the failure to relinquish possession of collateral upon satisfaction of the secured obligation would constitute a conversion. Inasmuch as problems apparently have not surfaced in the absence of statutory duties under former Article 9 and the common law duty appears to have been sufficient, this article does not impose a statutory duty to relinquish possession. 5. "Signed" Replaces "Authenticated." Consistent with the revised definition of "sign" in Section 1-201 [55-1-201 NMSA 1978], the cognate term "signed" replaces references to "authenticated" in the pre-2022 text of this section. Repeals and reenactments. — Laws 2001, ch. 139, § 18 repealed former 55-9-208 NMSA 1978, as enacted by Laws 1961, ch. 96, § 9-208, and enacted a new section, effective July 1, 2001. The 2023 amendment, effective January 1, 2024, revised certain provisions related to the duties of secured parties having control of collateral, and clarified certain language in the section; in Subsection (b), in the introductory clause, after "receiving", deleted "an authenticated" and added "a signed"; in Paragraph (b)(1), after "maintained", deleted "an authenticated statement" and added "a signed document"; deleted former Paragraph (b)(3) and added a new Paragraph (b)(3); in Paragraph (b)(4), after "maintained", deleted "an authenticated" and added "a signed"; in Paragraph (b)(5), after "secured party", deleted "an authenticated" and added "a signed"; and deleted former Paragraph (b)(6) and added new Paragraphs (b)(6) through (b)8). The 2005 amendment, effective January 1, 2006, adds Subsection (b)(6) to provide that a secured party who has control of an electronic document shall give control of the document to the persons specified in Subsections (b)(6)(A) through (C).
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