Commonwealth Consolidated Acts Commonwealth Consolidated Acts(a) an obligation (the secured obligation ) is secured by a security interest in collateral in the form of one of the following:
(i) an account;
(ii) chattel paper;
(iii) a negotiable instrument; and
(b) one or more persons owe an amount to the grantor on the collateral; and
(c) the debtor defaults on the secured obligation.
Note: This section does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).
(2) A secured party may do either or both of the following:
(a) give a written notice to a person mentioned in paragraph (1)(b) that:
(i) sets out the effect of subsection (3); or
(ii) is in the approved form;
(b) seize any proceeds of the collateral to which the secured party is entitled under section 32.
Note: A secured party might be prevented from taking action under this subsection by a higher priority party (see subsection 121(3)).
(3) A person who receives a notice under paragraph (2)(a) must pay, to the secured party, any amount that the person owes to the grantor on the collateral before the end of 5 business days after the later of:
(a) the day the notice is received; or
(b) the day the amount becomes due and payable.
Note: The period mentioned in this subsection may be extended by a court under section 293.
(4) The secured party must apply any amount received under paragraph (2)(b) or subsection (3) towards the secured obligation.
(5) If any amount is received under paragraph (2)(b) or
subsection (3) in the form of currency, then the amount must be
distributed in accordance with section 140.