Colorado  |  Real Estate Law

Legal Question

Asked on: 11/03/00, 4:29 am

default on a security agreement

I sold my business(tavern) 4 years ago and I am carrying the buyer with a $75,000 prommisory note, secured buy the furniture,equipment and inventory of the tavern.The buyer has only 7 payments left on the note. Recently I went into the tavern and noticed that the comercial stove and refridgerator were missing from the kitchen along with stainless steel shelving. According to the UCC security agreement, The secured party(me) must be immediatly informed if any of the collateral is moved to a different location or sold. I was never informed of the removal of the stove or fridge and these are the biggest part of the collateral.This is clearly a default of the security agreement. In the security agreement it says that in the event of a default that the debtor shall assemble the collateral and deliver it to the secured party(me). It also says that the remaining debt shall come due and payable all at once including interest.

My question is; In this kind of default,does the debtor only relinquish the collateral if they cannot pay the rest of the debt? Or do they have to relinquish both the collateral and pay off the rest of the debt due to the default?

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