2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 2A - Leases › Part 5 - DEFAULT › Section 55-2A-525 - Lessor's right to possession of goods.

(1) If a lessor discovers the lessee to be insolvent, the lessor may refuse to deliver the goods.
(2) After a default by the lessee under the lease contract of the type described in Section 55-2A-523(1) NMSA 1978 or 55-2A-523(3)(a) NMSA 1978, or, if agreed, after other default by the lessee, the lessor has the right to take possession of the goods. If the lease contract so provides, the lessor may require the lessee to assemble the goods and make them available to the lessor at a place to be designated by the lessor which is reasonably convenient to both parties. Without removal, the lessor may render unusable any goods employed in trade or business, and may dispose of goods on the lessee's premises (Section 55-2A-527 NMSA 1978).
(3) The lessor may proceed under Subsection (2) without judicial process if it can be done without breach of the peace or the lessor may proceed by action.
History:
1978 Comp., § 55-2A-525, enacted by Laws 1992, ch. 114, § 80.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Uniform Statutory Source:
— Sections 2-702(1) and 9-503 [55-2-702 and 55-9-503 NMSA 1978, respectively].
Changes:
— Substantially revised.
1. Subsection (1), a revised version of the provisions of Section 2-702(1) [55-2-702 NMSA 1978], allows the lessor to refuse to deliver goods if the lessee is insolvent. Note that the provisions of Section 2-702(2), granting the unpaid seller certain rights of reclamation, were not incorporated in this section. Subsection (2) made this unnecessary.
2. Subsection (2), a revised version of the provisions of Section 9-503 [55-9-503 NMSA 1978], allows the lessor, on a Section 2A-523(1) or 2A-523(3)(a) [55-2A-523 NMSA 1978] default by the lessee, the right to take possession of or reclaim the goods. Also, the lessor can contract for the right to take possession of the goods for other defaults by the lessee. Therefore, since the lessee's insolvency is an event of default in a standard lease agreement, Subsection (2) is the functional equivalent of Section 2-702(2) [55-2-702 NMSA 1978]. Further, subsection (2) sanctions the classic crate and delivery clause obligating the lessee to assemble the goods and to make them available to the lessor. Finally, the lessor may leave the goods in place, render them unusable (if they are goods employed in trade or business), and dispose of them on the lessee's premises.
3. Subsection (3), a revised version of the provisions of Section 9-503 [55-9-503 NMSA 1978], allows the lessor to proceed under Subsection (2) without judicial process, absent breach of the peace, or by action. Sections 2A-501(3), 2A-103(4) and 1-201(1) [55-2A-501, 55-2A-103 and 55-1-201 NMSA 1978, respectively]. In the appropriate case action includes injunctive relief.
Clark Equip. Co. v. Armstrong Equip. Co.
, 431 F.2d 54 (5th Cir. 1970), cert. denied, 402 U.S. 909 (1971). This Section, as well as a number of other Sections in this Part, are included in the Article to codify the lessor's common law right to protect the lessor's reversionary interest in the goods. Section 2A-103(1)(q) [55-2A-103 NMSA 1978]. These sections are intended to supplement and not displace principles of law and equity with respect to the protection of such interest. Sections 2A-103(4) and 1-103 [55-2A-103 and 55-1-103 NMSA 1978, respectively]. Such principles apply in many instances, e.g., loss or damage to goods if risk of loss passes to the lessee, failure of the lessee to return goods to the lessor in the condition stipulated in the lease, and refusal of the lessee to return goods to the lessor after termination or cancellation of the lease.
See also
Section 2A-532 [55-2A-532 NMSA 1978].
Cross References:
— Sections 1-106(2), 2-702(1), 2-702(2), 2A-103(4), 2A-501(3), 2A-532 and 9-503 [55-1-106, 55-2-702, 55-2A-103, 55-2A-501, 55-2A-532 and 55-9-503 NMSA 1978, respectively].
"Action". Section 1-201(1) [55-1-201 NMSA 1978].
"Delivery". Section 1-201(14) [55-1-201 NMSA 1978].
"Discover". Section 1-201(25) [55-1-201 NMSA 1978].
"Goods". Section 2A-103(1)(h) [55-2A-103 NMSA 1978].
"Insolvent". Section 1-201(23) [55-1-201 NMSA 1978].
"Lease contract". Section 2A-103(1)(l) [55-2A-103 NMSA 1978].
"Lessee". Section 2A-103(1)(n) [55-2A-103 NMSA 1978].
"Lessor". Section 2A-103(1)(p) [55-2A-103 NMSA 1978].
"Party". Section 1-201(29) [55-1-201 NMSA 1978].
"Rights". Section 1-201(36) [55-1-201 NMSA 1978].
ANNOTATIONS
Effective dates.
— Laws 1992, ch. 114, § 238 made Laws 1992, ch. 114, § 80 effective July 1, 1992.