KSC, TITLE 15. COMMERCE
Section 15.601. Definitions.
In this chapter:
(1) "creditor" is a creditor, seller, lessor, or person having rights in the property as security pursuant to an agreement subject to this chapter.
(2) "debtor" is a debtor, buyer, lessee, or person having equity in the property pursuant to an agreement subject to this chapter.
Section 15.602. Application of chapter.
This chapter applies to an agreement in any
form the intent of which is to give rights in personal property, including a
house on land not owned individually or entirely by the party purporting to give
an interest in the house, as security for the performance of an obligation,
including, a pledge, conditional sales agreement, chattel mortgage, or lease
pursuant to which ownership of personal property is to pass upon completion of
Section 15.603. Obligation.
A debtor and a creditor have an obligation
to exercise their rights in the property in good faith with regard for the
rights of the other. Each uses reasonable care in the custody and
preservation of the property while in his possession.
Section 15.604. Non-compliance by creditor.
If a creditor fails to comply with this
chapter, a court may by order restrain disposition of the property in a civil
action upon terms and conditions it may set. If a creditor has taken or
disposed of property in a manner inconsistent with this chapter, a debtor may
recover his actual resulting damages which are in no event less than one fourth
of the sum of all payments which he has made pursuant to the agreement with
interest at six percent a year.
An act or agreement of the debtor before or
at the time of the making of an agreement, or a provision or statement by the
debtor, in an agreement does not constitute a valid waiver of a provision of
this chapter, except that an agreement may provide that, if a debtor is in
default for twenty days or more, the creditor may take the property without
Section 15.606. Foreclosure procedure.
Foreclosure of rights of a debtor pursuant
to an agreement subject to this chapter may occur only after default by one of
the methods provided in this chapter.
Section 15.607. Nonjudicial foreclosure: property in
possession of debtor.
If the property is in the possession of the
(1) If an agreement provides that the creditor may take property if a debtor is in default for twenty days or more and the debtor is in default, a creditor may take possession of the property without notice, if this can occur without a breach of the peace. The creditor retains possession of the property for a period of twenty days, during which a debtor may redeem the property as provided in this section. After the period, without redemption, a creditor may hold the property as his own subject to the provisions of Section 15.609.
(2) If an agreement does not contain a provision for a taking without notice, a creditor, not more than forty or fewer than twenty days before a taking, gives written notice of default to a debtor. The notice states the default and the period at the end of which the creditor will take the property. The notice may be by personal service on the debtor or by leaving it at his usual place of abode or business with a person of sound mind not less than eighteen years of age. If the person who receives the notice is unable to read the notice, the deliverer orally explains it to him, if practicable, in a language understood by the receiver.
(3) If after notice the debtor does not perform an obligation regarding which he is in default before the day stated in the notice for taking, the creditor may take possession of the property if this can occur without a breach of the peace.
(4) If the taking of property can not occur without a breach of the peace, the foreclosure proceeds only by civil action pursuant to the judicial foreclosure provisions of this chapter. This chapter does not authorize a violation of law.
(5) This section does not affect the right of a creditor to proceed simultaneously pursuant to Section 6.2405 or limit the power of the Court to order a sale authorized by Section 6.2405 on terms or notice it may direct.
Section 15.608. Nonjudicial foreclosure: property in
possession of creditor.
If the property is in the possession of the
(1) Not more than forty nor less than twenty days before foreclosing on the property a creditor gives written notice to the debtor of the creditor's intention to foreclose. The notice states the default and the period at the end of which foreclosure of the property will occur. Notice is in accordance with Section 15.607(2).
(2) If after notice a debtor does not perform an obligation on which he has defaulted before the day stated in the notice of foreclosure, a creditor may hold the property as his own subject to the provisions of Section 15.609.
Section 15.609. Procedure.
(1) If at the time of the taking or foreclosure a debtor pursuant to this chapter has paid at least half of the principal due pursuant to an agreement, a creditor sells the property at public auction not more than ninety days after the taking or foreclosure. A creditor gives a debtor not less than ten days written notice of the sale in the manner provided in Section 15.607, not sooner than expiration of the twenty day retention period provided in Section 15.607, if the taking occurred pursuant to
that section. The creditor posts notice of the sale in at least three
conspicuous places within the State at least five days before the sale and makes
a good faith attempt to obtain fair value for the property at the sale. A
creditor may bid for the property at the sale in good faith.
(2) Application of the proceeds of the sale is in the following order:
(a) the payment of the reasonable expenses of sale;
(b) the payment of the reasonable expenses of taking, keeping and storing the property; and
(c) the satisfaction of the balance due under the agreement.
The creditor pays a sum remaining after the satisfaction of claims to the debtor. If the proceeds of the sale are not sufficient to defray the reasonable expenses of sale and the reasonable expenses of taking, keeping and storing the property and the balance due under the agreement, the creditor may recover the deficiency from the debtor or a person who has succeeded to the debtor's obligations.
(3) If at the time of the taking or foreclosure a debtor has not paid at least half of the principal due under the agreement, the creditor has the option of:
(a) notifying the debtor in the manner provided in Section 15.607 of his election to retain the property as his own without obligation to account to the debtor, discharging the debtor of all obligations arising from the agreement; or
(b) selling the property pursuant to subsection 1 and applying the proceeds as provided in subsection (2) with a right to recover a deficiency.
(4) During the twenty day retention period provided in Section 15.607 and at any other time before a creditor has disposed of the property or before the debtor's obligation has been discharged pursuant to this section, a debtor may redeem the property by tendering fulfillment of all obligations arising from the agreement as of the tender and payment of expenses reasonably incurred by the creditor in taking, keeping and storing the property and in arranging for sale. Upon tender a debtor is entitled to take possession of the property and to continue in the performance of the agreement as if default had not occurred. Upon written demand given by the debtor to the creditor in the manner provided in Section 15.607, a creditor furnishes to the debtor a written statement of the sum due pursuant to the agreement and the expenses of taking, keeping and storing the property and arranging for the sale. By his failure to furnish the statement within a reasonable time after demand a creditor forfeits to the debtor five dollars and is liable to him for all damages suffered because of the failure.