(July 22, 1992, D.C. Law 9-128, § 2(b), 39 DCR 3830 ; Oct. 26, 2000, D.C. Law 13-201, § 201(d)(3), 47 DCR 7576 .)
Prior Codifications
1981 Ed., § 28:2A-307.
Effect of Amendments
D.C. Law 13-201 , enacting a new Article 9 of the Uniform Commercial Code applicable July 1, 2001, made conforming amendments to this section applicable upon the same date.
Uniform Commercial Code Comment
Uniform Statutory Source: None for subsection (1). Subsection (2) is derived from Section 9-301, and subsections (3) and (4) are derived from Section 9-307(1) and (3), respectively.
Changes: The provisions of Sections 9-301 and 9-307(1) and (3) were incorporated, and modified to reflect leasing terminology and the basic concepts reflected in this Article.
Purposes: 1. Subsection (1) states a general rule of priority that a creditor of the lessee takes subject to the lease contract. The term lessee (Section 2A-103(1)(n) includes sublessee. Therefore, this subsection not only covers disputes between the prime lessor and a creditor of the prime lessee but also disputes between the prime lessor, or the sublessor, and a creditor of the sublessee. Section 2A-301 official comment 3(g). Further, by using the term creditor ( Section 1-201(12)), this subsection will cover disputes with a general creditor, a secured creditor, a lien creditor and any representative of creditors. Section 2A-103(4).
2. Subsection (2) states a general rule of priority that a creditor of a lessor takes subject to the lease contract. Note the discussion above with regard to the scope of these rules. Section 2A-301 official comment 3(g). Thus, the section will not only cover disputes between the prime lessee and a creditor of the prime lessor but also disputes between the prime lessee, or the sublessee, and a creditor of the sublessor.
3. To take priority over the lease contract, and the interests derived therefrom, the creditor must come within the exception stated in subsection (2) or within one of the provisions of Article 9 mentioned in subsection (3). Subsection (2) provides that where the creditor holds a lien (Section 2A-103(1)(r)) that attached before the lease contract became enforceable (Section 2A-301), the creditor does not take subject to the lease. Subsection (3) provides that a lessee takes its leasehold interest subject to a security interest except as otherwise provided in Sections 9-317, 9-321, or 9-323.
4. The rules of this section operate in favor of whichever party to the lease contract may enforce it, even if one party perhaps may not, e.g., under Section 2A-201(1)(b).
Cross References: Sections 1-201(12), 1-201(25), 1-201(37), 1-201(44), 2A-103(1)(n), 2A-103(1)(o), 2A-103(1)(r), 2A-103(4), 2A-201(1)(b), 2A-301 official comment 3(g), Article 9, especially Sections 9-301, 9-307(1) and 9-307(3).
Definitional Cross References: “Creditor”. Section 1-201(12).
“Goods”. Section 2A-103(1)(h).
“Knowledge” and “Knows”. Section 1-201(25).
“Lease”. Section 2A-103(1)(j).
“Lease contract”. Section 2A-103(1)(l).
“Leasehold interest”. Section 2A-103(1)(m).
“Lessee”. Section 2A-103(1)(n).
“Lessee in the ordinary course of business”. Section 2A-103(1)(o).
“Lessor”. Section 2A-103(1)(p).
“Lien”. Section 2A-103(1)(r).
“Party”. Section 1-201(29).
“Pursuant to commitment”. Section 2A-103(3).
“Security interest”. Section 1-201(37).
