AI-assisted research summary: Certain lease terms cannot block or condition security interests in the lease interest or the lessor’s residual interest, except as stated in subsection (b).
§9-407. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest (a) Term restricting assignment generally ineffective. Except as otherwise provided in Subsection (b), a term in a lease is ineffective to the extent that it: (1) prohibits, restricts, or requires the consent of a party to the lease to the creation, attachment, perfection, or enforcement of a security interest in an interest of a party under the lease or in the lessor's residual interest in the goods; or (2) provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease. (b) Effectiveness of certain terms. A term described in Subsection (a)(2) is effective to the extent that there is: (1) a transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or (2) a delegation of a material performance of either party to the lease in violation of the term. (c) [Reserved.] Acts 1988, No. 528, §1, eff. Jan. 1, 1990; Acts 1989, No. 135, §7, eff. Jan. 1, 1990; Acts 1990, No. 1079, §4, eff. Sept. 1, 1990; Acts 1991, No. 377, §4, eff. Jan. 1, 1992; Acts 2001, No. 128, §1, eff. July 1, 2001.