KRS 355.9-109: Scope.

(1) Except as otherwise provided in subsections (3) and (4) of this section, this article

applies to:

(a) A transaction, regardless of its form, that creates a security interest in personal

property or fixtures by contract;

(b) An agricultural lien;

(c) A sale of accounts, chattel paper, payment intangibles, or promissory notes;

(d) A consignment;

(e) A security interest arising under KRS 355.2 -401, 355.2-505, 355.2-711(3), or

355.2A-508(5), as provided in KRS 355.9-110; and

(f) A security interest arising under KRS 355.4-210 or 355.5-118.

(2) The application of this article to a security interest in a secured obligation is not

affected by the fact that the obligation is itself secured by a transaction or interest to

which this article does not apply.

(3) This article does not apply to the extent that:

(a) A statute, regulation, or treaty of the United States preempts this article;

(b) Another statute of this Commonwealth expressly governs the creation,

perfection, priority, or enforcement of a security interest created by this

Commonwealth or a governmental unit of this Commonwealth;

(c) A statute of another state, a foreign country, or a governmental unit of another

state or a foreign country, other than a statute generally applicable to security

interests, expressly governs creation, perfection, priority, or enforcement of a

security interest created by the state, country, or governmental unit; or

(d) The rights of a transferee beneficiary or nominated person under a letter of

credit are independent and superior under KRS 355.5-114.

(4) This article does not apply to:

(a) A landlord's lien, other than an agricultural lien;

(b) A lien, other than an agricultural lien, given by statute or other rule of law for

services or materials, but KRS 355.9 -333 applies with respect to priority of

the lien;

(c) An assignment of a claim for wages, salary, or other compensation of an

employee, or for workers' compensation benefits payable to an individual;

(d) A sale of accounts, chattel paper, payment intangibles, or promissory notes as

part of a sale of the business out of which they arose;

(e) An assignment of accounts, chattel paper, payment intangibles, or promissory

notes which is for the purpose of collection only;

(f) An assignment of a right to payment under a contract to an assignee that is

also obligated to perform under the contract;

(g) An assignment of a single account, payment inta ngible, or promissory note to

an assignee in full or partial satisfaction of a preexisting indebtedness;

(h) A transfer of an interest in or an assignment of a claim under a policy of

insurance, other than an assignment by or to a health-care provider of a health-

care-insurance receivable and any subsequent assignment of the right to

payment, but KRS 355.9 -315 and 355.9 -322 apply with respect to proceeds

and priorities in proceeds;

(i) An assignment of a right represented by a judgment, other than a judgmen t

taken on a right to payment that was collateral;

(j) A right of recoupment or set-off, but:

1. KRS 355.9 -340 applies with respect to the effectiveness of rights of

recoupment or set-off against deposit accounts; and

2. KRS 355.9-404 applies with respect to defenses or claims of an account

debtor;

(k) The creation or transfer of an interest in or lien on real property, including a

lease or rents thereunder, except to the extent that provision is made for:

1. Liens on real property in KRS 355.9-203 and 355.9-308;

2. Fixtures in KRS 355.9-334;

3. Fixture filings in KRS 355.9 -501, 355.9-502, 355.9-512, 355.9-516, and

355.9-519; and

4. Security agreements covering personal and real property in KRS 355.9 -

604;

(l) An assignment of a claim arising in tort, other t han a commercial tort claim,

but KRS 355.9 -315 and 355.9 -322 apply with respect to proceeds and

priorities in proceeds;

(m) An assignment of a deposit account in a consumer transaction, but KRS

355.9-315 and 355.9 -322 apply with respect to proceeds and pri orities in

proceeds;

(n) A claim or right to receive compensation for injuries or sickness as described

in 26 U.S.C. sec. 104(a)(1) or (2), as amended from time to time;

(o) A claim or right to receive benefits under a special needs trust as described in

42 U.S.C. sec. 1396p(d)(4), as amended from time to time;

(p) A right to receive money under a structured settlement as defined by KRS

454.430; or

(q) A public -finance transaction or a transfer by a government or governmental

unit.