272

LAWS OF MARYLAND

[Ch. 49

assignee; modification of sales warranties where security
agreement exists.

(1)    Subject to any statute or decision which
establishes a different rule for buyers or lessees of
consumer goods, an agreement by a buyer or lessee that he
will not assert against an assignee any claim or defense
which he may have against the seller or lessor is
enforceable by an assignee who takes his assignment for
value, in good faith and without notice of a claim or
defense, except as to defenses of a type which may be
asserted against a holder in due course of a negotiable
instrument under the [subtitle] TITLE on commercial paper
([subtitle] TITLE 3). A buyer who as part of one
transaction signs both a negotiable instrument and a
security agreement makes such an agreement.

(2)   When a seller retains a purchase money security
interest in goods the [subtitle] TITLE on [sale] SALES
((subtitle] TITLE 2) governs the sale and any disclaimer,
limitation or modification of the seller's warranties.

9—207. Sights and duties when collateral is in secured
party's possession.

(1)   A secured party must use reasonable care in the
custody and preservation of collateral in his possession.
In the case of an instrument or chattel paper reasonable
care includes taking necessary steps to preserve rights
against prior parties unless otherwise agreed.

(2)   Unless otherwise agreed, when collateral is in
the secured party's possession

(a)    Reasonable expenses (including the cost
of any insurance and payment of taxes or other charges)
incurred in the custody, preservation, use or operation
of the collateral are chargeable to the debtor and are
secured by the collateral;

(b)    The risk of accidental loss or damage is
on the debtor to the extent of any deficiency in any
effective insurance coverage;

(c)    The secured party may hold as additional
security any increase or profits (except money) received
from the collateral, but money so received, unless
remitted to the debtor, shall be applied in reduction of
the secured obligation;

(d)     The secured party must keep the
collateral identifiable but fungible collateral may be
commingled;