KRS 355.8-105: Notice of adverse claim.

(1) A person has notice of an adverse claim if:

(a) The person knows of the adverse claim;

(b) The person is aware of facts sufficient to indicate that there is a significant

probability that the adverse claim exists and deliberately avoids information

that would establish the existence of the adverse claim; or

(c) The person has a duty, imposed by statute or regulation, to investigate whether

an adverse claim exists, and the investigation so required would establish the

existence of the adverse claim.

(2) Having knowledge that a financial asset or interest therein is or has been transferred

by a representative imposes no duty of inquiry into the rightfulness of a transaction

and is not notice of an adverse claim. However, a person who knows that a

representative has transferred a financial asset or inter est therein in a transaction

that is, or whose proceeds are being used, for the individual benefit of the

representative or otherwise in breach of duty has notice of an adverse claim.

(3) An act or event that creates a right to immediate performance of the principal

obligation represented by a security certificate or sets a date on or after which the

certificate is to be presented or surrendered for redemption or exchange does not

itself constitute notice of an adverse claim except in the case of a transfer more

than:

(a) One (1) year after a date set for presentment or surrender for redemption or

exchange; or

(b) Six (6) months after a date set for payment of money against presentation or

surrender of the certificate, if money was available for payment on that date.

(4) A purchaser of a certificated security has notice of an adverse claim if the security

certificate:

(a) Whether in bearer or registered form, has been indorsed "for collection" or

"for surrender" or for some other purpose not involving transfer; or

(b) Is in bearer form and has on it an unambiguous statement that it is the property

of a person other than the transferor, but the mere writing of a name on the

certificate is not such a statement.

(5) Filing of a financing statement under Article 9 of this chapter is not notice of an

adverse claim to a financial asset.