NMSA 55-9-616. Explanation of calculation of surplus or deficiency

55-9-616. Explanation of calculation of surplus or deficiency. (a) In this section: (1) "explanation" means a record that: (A) states the amount of the surplus or deficiency; (B) provides an explanation in accordance with Subsection (c) of this section of how the secured party calculated the surplus or deficiency; (C) states, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates and expenses may affect the amount of the surplus or deficiency; and (D) provides a telephone number or mailing address from which additional information concerning the transaction is available; and (2) "request" means a record: (A) signed by a debtor or consumer obligor; (B) requesting that the recipient provide an explanation; and (C) sent after disposition of the collateral under Section 55-9-610 NMSA 1978. (b) In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under Section 55-9-615 NMSA 1978, the secured party shall: (1) send an explanation to the debtor or consumer obligor, as applicable, after the disposition and: (A) before or when the secured party accounts to the debtor and pays any surplus or first makes demand in a record on the consumer obligor after the disposition for payment of the deficiency; and (B) within fourteen days after receipt of a request; or (2) in the case of a consumer obligor who is liable for a deficiency, within fourteen days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency. (c) To comply with Subparagraph (B) of Paragraph (1) of Subsection (a) of this section, an explanation must provide the following information in the following order: (1) the aggregate amount of obligations secured by the security interest under which the disposition was made and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date: (A) if the secured party takes or receives possession of the collateral after default, not more than thirty-five days before the secured party takes or receives possession; or (B) if the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than thirty-five days before the disposition; (2) the amount of proceeds of the disposition; (3) the aggregate amount of the obligations after deducting the amount of proceeds; (4) the amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing and disposing of the collateral, and attorney fees secured by the collateral which are known to the secured party and relate to the current disposition; (5) the amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in Paragraph (1) of this subsection; and (6) the amount of the surplus or deficiency. (d) A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of Subsection (a) of this section is sufficient, even if it includes minor errors that are not seriously misleading. (e) A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to Paragraph (1) of Subsection (b) of this section. The secured party may require payment of a charge not exceeding twenty-five dollars ($25.00) for each additional response. History: 1978 Comp., § 55-9-616, enacted by Laws 2001, ch. 139, § 113; 2023, ch. 142, § 89. 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. Duty to Send Information Concerning Surplus or Deficiency. This section reflects the view that, in every consumer-goods transaction, the debtor or obligor is entitled to know the amount of a surplus or deficiency and the basis upon which the surplus or deficiency was calculated. Under subsection (b)(1), a secured party is obligated to provide this information (an "explanation," defined in subsection (a)(1)) no later than the time that it accounts for and pays a surplus or the time of its first demand in a record in an attempt to collect the deficiency. The obligor need not make a request for an accounting in order to receive an explanation. A secured party who does not attempt to collect a deficiency in a demand in a record or account for and pay a surplus has no obligation to send an explanation under subsection (b)(1) and, consequently, cannot be liable for noncompliance. A debtor or secondary obligor need not wait until the secured party commences collection efforts in a demand in a record in order to receive an explanation of how a deficiency or surplus was calculated. Subsection (b)(1)(B) obliges the secured party to send an explanation within 14 days after it receives a "request" (defined in subsection (a)(2)). 3. Explanation of Calculation of Surplus or Deficiency. Subsection (c) contains the requirements for how a calculation of a surplus or deficiency must be explained in order to satisfy subsection (a)(1)(B). It gives a secured party some discretion concerning rebates of interest or credit service charges. The secured party may include these rebates in the aggregate amount of obligations secured, under subsection (c)(1), or may include them with other types of rebates and credits under subsection (c)(5). Rebates of interest or credit service charges are the only types of rebates for which this discretion is provided. If the secured party provides an explanation that includes rebates of precomputed interest, its explanation must so indicate. The expenses and attorney's [attorney] fees to be described pursuant to subsection (c)(4) are those relating to the most recent disposition, not those that may have been incurred in connection with earlier enforcement efforts and which have been resolved by the parties. 4. Liability for Noncompliance. A secured party who fails to comply with subsection (b)(2) is liable for any loss caused plus $500. See section 9-625(b), (c), and (e)(6). A secured party who fails to send an explanation under subsection (b)(1) is liable for any loss caused plus, if the noncompliance was "part of a pattern, or consistent with a practice of noncompliance," $500. See section 9-625(b), (c), and (e)(5). However, a secured party who fails to comply with this section is not liable for statutory minimum damages under section 9-625(c)(2). See section 9-628(d). 5. "Signed" Replaces "Authenticated"; Medium Neutrality. Consistent with the revised definition of "sign" in Section 1-201, the cognate term "signed" replaces the reference to "authenticated" in the pre-2022 text of this section. In furtherance of medium neutrality, the reference in the pre-2022 text of this section to a "written demand" has been replaced by a reference to a "demand in a record" and the reference to a "writing" has been replaced by a reference to a "record."