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HomeCommercial CodeDiv. 9Ch. 2§ 9209 Release Of Account Debtors

§ 9209 Release Of Account Debtors

Commercial Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 9209 Release Of Account Debtors

Key Takeaways

  • •If a person owes money but there's no loan left and the lender isn't giving more money, this rule applies.
  • •If the person who owes money asks in writing, the lender must tell anyone paying the debt (like a customer) that they don’t have to pay the lender anymore.
  • •The lender has 10 days to send this notice after getting the request.
  • •This rule doesn’t apply if the debt was sold to someone else.

Example

A small business owner takes a loan using their customer payments as security. Later, the loan is fully paid off, and the bank isn’t giving more money. The business owner asks the bank in writing to tell their customers they don’t have to pay the bank anymore.

The bank must send a letter to the customers within 10 days, saying they don’t owe the bank anything. If the bank doesn’t do this, they’re breaking the rule.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 9209 Release Of Account Debtors

(a) Except as otherwise provided in subdivision (c), this section applies if both of the following conditions are satisfied: (1) There is no outstanding secured obligation. (2) The secured party is not committed to make advances, incur obligations, or otherwise give value. (b) Within 10 days after receiving a signed demand by the debtor, a secured party shall send to an account debtor that has received notification under subdivision (a) of Section 9406 or subdivision (b) of Section 12106 of an assignment to the secured party as assignee a signed record that releases the account debtor from any further obligation to the secured party. (c) This section does not apply to an assignment constituting the sale of an account, chattel paper, or payment intangible. (Amended by Stats. 2023, Ch. 210, Sec. 34. (SB 95) Effective January 1, 2024.)

Last verified: January 23, 2026

Key Terms

outstanding secured obligationaccount debtorassignment constituting the salechattel paperpayment intangible

Related Statutes

  • § 9202 Title Secured Party Rights Regardless Title
  • § 9207 Secured Party Collateral Care
  • § 9208 Release Deposit Account Control
  • § 9318 Debtor'S Retained Collateral Rights
  • § 9406 Payment Obligation After Assignment

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Commercial Code. Section 9209.
View Official Source