Kentucky Statutes 355.9-203 – Attachment and enforceability of security interest — Proceeds — Supporting obligations — Formal requisites
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(1) A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.
(2) Except as otherwise provided in subsections (3) to (9) of this section, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:
(a) Value has been given;
(b) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and
(c) One (1) of the following conditions is met:
1. The debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;
2. The collateral is not a certificated security and is in the possession of the secured party under KRS § 355.9-313 pursuant to the debtor’s security agreement;
3. The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under KRS § 355.8-301 pursuant to the debtor’s security agreement; or
4. The collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents, and the secured party has control under KRS § 355.7-106, 355.9-104, 355.9-105, 355.9-
106, or 355.9-107 pursuant to the debtor’s security agreement.
(3) Subsection (2) of this section is subject to KRS § 355.4-210 on the security interest of a collecting bank, KRS § 355.5-118 on the security interest of a letter-of-credit issuer or nominated person, KRS § 355.9-110 on a security interest arising under Article 2 or 2A of this chapter, and KRS § 355.9-206 on security interests in investment property.
(4) A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this article or by contract:
(a) The security agreement becomes effective to create a security interest in the person’s property; or
(b) The person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.
(5) If a new debtor becomes bound as debtor by a security agreement entered into by another person:
(a) The agreement satisfies subsection (2)(c) of this section with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and
(b) Another agreement is not necessary to make a security interest in the property enforceable.
(6) The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by KRS § 355.9-315 and is also attachment of a security interest in a supporting obligation for the collateral.
(7) The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
(8) The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.
(9) The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.
Effective: July 1, 2013
History: Amended 2012 Ky. Acts ch. 132, sec. 62, effective July 1, 2013. — Repealed and reenacted 2001 Ky. Acts ch. 119, sec. 4, effective July 1, 2001. — Repealed and reenacted 2000 Ky. Acts ch. 408, sec. 33, effective July 1, 2001. — Amended 1996
Ky. Acts ch. 130, sec. 170, effective January 1, 1997. — Amended 1986 Ky. Acts ch.
118, sec. 60, effective July 1, 1987. — Created 1958 Ky. Acts ch. 77, sec. 9-203, effective July 1, 1960.
Legislative Research Commission Note (3/14/2013). 2013 Ky. Acts ch. 10, secs. 2 and
3 provide that the statutes in Article 9 of the Uniform Commercial Code that were amended or created in 2012 Ky. Acts ch. 132, secs. 60 to 99, are effective July 1,
2013. This statute was one of those sections. Since only the effective date of a prior Act was altered, and not the text of the affected statutes, reference to 2013 Ky. Acts ch. 10 does not appear in the history for this statute.
Legislative Research Commission Note (7/12/2012). In 2010, the National Conference of Commissioners on Uniform State Laws and the American Law Institute proposed a Uniform Act for adoption by the states that contained revisions to Article 9 of the Uniform Commercial Code. The effective date for all proposed Article 9 revisions was to be July 1, 2013. Those revisions were enacted in 2012 Ky. Acts Chapter 132, Sections 60 to 99. Sections 60 to 90 contained the substantive Article 9 revisions, and Sections 91 to 99 contained the transitional Article 9 revisions created to handle secured transactions made prior to July 1, 2013. Section 91 of that Act (codified as KRS § 355.9-801) and Section 102 of that Act (a noncodified effective date provision) both stated, “Sections 91 to 99 of this Act take effect July 1, 2013.” The normal effective date for legislation enacted at the 2012 Regular Session of the General Assembly is July 12, 2012. In Opinion of the Attorney General 12-010, issued July 3,
2012, Section 91 (codified as KRS § 355.9-801) was determined to have contained a manifest clerical error, and should have instead read, “Sections 60 to 90 of this Act take effect July 1, 2013,” thereby making the substantive Article 9 revisions effective on the same date as the transitional Article 9 provisions in conformity with the 2010
Uniform Act proposal and 2012 Ky. Acts Chapter 132, Section 102. This statute was one of the substantive provisions of Article 9 contained in 2012 Ky. Acts Chapter
132, Sections 60 to 90.
Legislative Research Commission Note (7/14/2000). Although 2000 Acts ch. 408, sec.
33, has a reference to “Section 170 of this Act” (which was codified as KRS § 355.8-
106) in subsection (2)(c)3. of this statute, that reference has been codified as KRS
355.8-301 (which was Section 172 of Chapter 408) in order to match the official text of Revised Article 9. Amendments to the introduced version of this bill in the Senate
inadvertently did not make the necessary adjustment to this internal reference; this failure was clearly a manifest typographical or clerical error and has been corrected in codification under KRS § 7.136(1)(h).
Legislative Research Commission Note (7/14/2000). Although 2000 Acts ch. 408, sec.
33, has a reference to “Section 165 of this Act” (which was codified as KRS § 355.2A-
307) in subsection (3) of this statute, that reference has been codified as KRS § 355.4-
210 (which was Section 167 of Chapter 408) in order to match the official text of Revised Article 9. Amendments to the introduced version of this bill in the Senate inadvertently did not make the necessary adjustment to this internal reference; this failure was clearly a manifest typographical or clerical error and has been corrected in codification under KRS § 7.136(1)(h).
(2) Except as otherwise provided in subsections (3) to (9) of this section, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:
Terms Used In Kentucky Statutes 355.9-203
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Attorney: means attorney-at-law. See Kentucky Statutes 446.010
- Contract: A legal written agreement that becomes binding when signed.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Statute: A law passed by a legislature.
- Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
(a) Value has been given;
(b) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and
(c) One (1) of the following conditions is met:
1. The debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;
2. The collateral is not a certificated security and is in the possession of the secured party under KRS § 355.9-313 pursuant to the debtor’s security agreement;
3. The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under KRS § 355.8-301 pursuant to the debtor’s security agreement; or
4. The collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents, and the secured party has control under KRS § 355.7-106, 355.9-104, 355.9-105, 355.9-
106, or 355.9-107 pursuant to the debtor’s security agreement.
(3) Subsection (2) of this section is subject to KRS § 355.4-210 on the security interest of a collecting bank, KRS § 355.5-118 on the security interest of a letter-of-credit issuer or nominated person, KRS § 355.9-110 on a security interest arising under Article 2 or 2A of this chapter, and KRS § 355.9-206 on security interests in investment property.
(4) A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this article or by contract:
(a) The security agreement becomes effective to create a security interest in the person’s property; or
(b) The person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.
(5) If a new debtor becomes bound as debtor by a security agreement entered into by another person:
(a) The agreement satisfies subsection (2)(c) of this section with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and
(b) Another agreement is not necessary to make a security interest in the property enforceable.
(6) The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by KRS § 355.9-315 and is also attachment of a security interest in a supporting obligation for the collateral.
(7) The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
(8) The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.
(9) The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.
Effective: July 1, 2013
History: Amended 2012 Ky. Acts ch. 132, sec. 62, effective July 1, 2013. — Repealed and reenacted 2001 Ky. Acts ch. 119, sec. 4, effective July 1, 2001. — Repealed and reenacted 2000 Ky. Acts ch. 408, sec. 33, effective July 1, 2001. — Amended 1996
Ky. Acts ch. 130, sec. 170, effective January 1, 1997. — Amended 1986 Ky. Acts ch.
118, sec. 60, effective July 1, 1987. — Created 1958 Ky. Acts ch. 77, sec. 9-203, effective July 1, 1960.
Legislative Research Commission Note (3/14/2013). 2013 Ky. Acts ch. 10, secs. 2 and
3 provide that the statutes in Article 9 of the Uniform Commercial Code that were amended or created in 2012 Ky. Acts ch. 132, secs. 60 to 99, are effective July 1,
2013. This statute was one of those sections. Since only the effective date of a prior Act was altered, and not the text of the affected statutes, reference to 2013 Ky. Acts ch. 10 does not appear in the history for this statute.
Legislative Research Commission Note (7/12/2012). In 2010, the National Conference of Commissioners on Uniform State Laws and the American Law Institute proposed a Uniform Act for adoption by the states that contained revisions to Article 9 of the Uniform Commercial Code. The effective date for all proposed Article 9 revisions was to be July 1, 2013. Those revisions were enacted in 2012 Ky. Acts Chapter 132, Sections 60 to 99. Sections 60 to 90 contained the substantive Article 9 revisions, and Sections 91 to 99 contained the transitional Article 9 revisions created to handle secured transactions made prior to July 1, 2013. Section 91 of that Act (codified as KRS § 355.9-801) and Section 102 of that Act (a noncodified effective date provision) both stated, “Sections 91 to 99 of this Act take effect July 1, 2013.” The normal effective date for legislation enacted at the 2012 Regular Session of the General Assembly is July 12, 2012. In Opinion of the Attorney General 12-010, issued July 3,
2012, Section 91 (codified as KRS § 355.9-801) was determined to have contained a manifest clerical error, and should have instead read, “Sections 60 to 90 of this Act take effect July 1, 2013,” thereby making the substantive Article 9 revisions effective on the same date as the transitional Article 9 provisions in conformity with the 2010
Uniform Act proposal and 2012 Ky. Acts Chapter 132, Section 102. This statute was one of the substantive provisions of Article 9 contained in 2012 Ky. Acts Chapter
132, Sections 60 to 90.
Legislative Research Commission Note (7/14/2000). Although 2000 Acts ch. 408, sec.
33, has a reference to “Section 170 of this Act” (which was codified as KRS § 355.8-
106) in subsection (2)(c)3. of this statute, that reference has been codified as KRS
355.8-301 (which was Section 172 of Chapter 408) in order to match the official text of Revised Article 9. Amendments to the introduced version of this bill in the Senate
inadvertently did not make the necessary adjustment to this internal reference; this failure was clearly a manifest typographical or clerical error and has been corrected in codification under KRS § 7.136(1)(h).
Legislative Research Commission Note (7/14/2000). Although 2000 Acts ch. 408, sec.
33, has a reference to “Section 165 of this Act” (which was codified as KRS § 355.2A-
307) in subsection (3) of this statute, that reference has been codified as KRS § 355.4-
210 (which was Section 167 of Chapter 408) in order to match the official text of Revised Article 9. Amendments to the introduced version of this bill in the Senate inadvertently did not make the necessary adjustment to this internal reference; this failure was clearly a manifest typographical or clerical error and has been corrected in codification under KRS § 7.136(1)(h).