Commonwealth Consolidated Acts Commonwealth Consolidated ActsRetaining collateral free of interests if notices have been given in accordance with section 135
(1) If:
(a) a secured party gives one or more notices in accordance with section 135 to retain collateral; and
(b) no notice of objection is given to the secured party in accordance with subsection 137(2);
then, at the end of the day specified in accordance with paragraph 135(3)(c), the secured party is entitled to take steps to have title to the collateral pass to the secured party.
(2) At the time the title to the collateral passes to the secured party, the secured party takes the collateral free of all of the following interests in the collateral:
(a) the interest of the grantor;
(b) the security interest of the secured party to whom title passes;
(c) all security interests that have a lower priority than the security interest of that secured party.
Acquiring collateral that has been retained free of interests if notices have not been given in accordance with section 135
(3) A person takes collateral free of the interests referred to in subsection (2) if:
(a) a secured party is required to give one or more notices in relation to the collateral in accordance with section 135; and
(b) the secured party has not done so; and
(c) the person acquires the collateral from the secured party for new value; and
(d) the person has no actual knowledge that the requirements of section 135 have not been complied with.
(4) Subsection (3) applies in relation to a security interest referred to in paragraph (2)(c) whether or not a registration with respect to the security interest is effective.
Extinguishment of obligation owed to the secured party
(5) If a secured party (the retaining secured party ) takes collateral under this section free of the interests referred to in subsection (2):
(a) the debt or other obligation secured by the security interest held by the retaining secured party is extinguished; but
(b) paragraph (2)(c) does not have the effect that a debt or other obligation secured by another security interest in the collateral is extinguished, if the other security interest has a lower priority than the security interest of the retaining secured party.