NY UCC § 9-207 (2021)
2021 New York Laws UCC - Uniform Commercial Code Article 9 - Secured Transactions Part 2 - Effectiveness of Security Agreement; Attachment of Security Interest; Rights of Parties to Security Agreement Sub Part 2 - Rights and Duties 9-207 - Rights and Duties of Secured Party Having Possession or Control of Collateral.

Section 9--207. Rights  and Duties of Secured Party Having Possession or                   Control of Collateral.  (a) Duty of care when secured party in possession. Except as otherwise provided in subsection (d), a secured party shall use reasonable care in the custody and  preservation  of  collateral  in  the  secured  party's possession.  In  the  case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve  rights  against  prior parties unless otherwise agreed.  (b) Expenses,   risks,  duties,  and  rights  when  secured  party  in possession. Except as otherwise provided in subsection (d), if a secured party has possession of collateral:       (1) reasonable expenses, including  the  cost  of  insurance  and            payment  of  taxes or other charges, incurred in the custody,            preservation,  use,  or  operation  of  the  collateral   are            chargeable to the debtor and are secured by the collateral;       (2) the risk of accidental loss or damage is on the debtor to the            extent of a deficiency in any effective insurance coverage;       (3) the secured party shall keep the collateral identifiable, but            fungible collateral may be commingled; and       (4) the secured party may use or operate the collateral:           (A) for  the  purpose  of  preserving  the  collateral or its                value;           (B) as permitted by an order  of  a  court  having  competent                jurisdiction; or           (C) except  in  the case of consumer goods, in the manner and                to the extent agreed by the debtor.  (c) Duties and rights when secured party  in  possession  or  control. Except  as  otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under Section  7--106, 9--104, 9--105, 9--106, or 9--107:       (1) may hold as additional security any proceeds, except money or            funds, received from the collateral;       (2) shall  apply  money  or funds received from the collateral to            reduce the secured obligation, unless remitted to the debtor;            and       (3) may create a security interest in the collateral.  (d) Buyer of certain rights to payment. If  the  secured  party  is  a buyer  of  accounts,  chattel  paper, payment intangibles, or promissory notes or a consignor:       (1) subsection (a) does not apply unless  the  secured  party  is            entitled under an agreement:           (A) to charge back uncollected collateral; or           (B) otherwise  to full or limited recourse against the debtor                or a secondary obligor based on the nonpayment  or  other                default  of  an  account  debtor  or other obligor on the                collateral; and       (2) subsections (b) and (c) do not apply.