KRS 355.9-313: When possession by or delivery to secured party perfects security

interest without filing.

(1) (a) Except as otherwise provided in subsection (2) of this section, a secured party

may perfect a security interest in goods, instruments , negotiable tangible

documents, or tangible money by taking possession of the collateral.

(b) A secured party may perfect a security interest in certificated securities by

taking delivery of the certificated securities under KRS 355.8-301.

(2) With respec t to goods covered by a certificate of title issued by this

Commonwealth, a secured party may perfect a security interest in the goods by

taking possession of the goods only in the circumstances described in KRS 355.9 -

316(4).

(3) With respect to collateral other than certificated securities and goods covered by a

document, a secured party takes possession of collateral in the possession of a

person other than the debtor, the secured party, or a lessee of the collateral from the

debtor in the ordinary course of the debtor's business, when:

(a) The person in possession signs a record acknowledging that it holds

possession of the collateral for the secured party's benefit; or

(b) The person takes possession of the collateral after having signed a record

acknowledging that it will hold possession of the collateral for the secured

party's benefit.

(4) If perfection of a security interest depends upon possession of the collateral by a

secured party, perfection occurs not earlier than the time the secured party take s

possession and continues only while the secured party retains possession.

(5) A security interest in a certificated security in registered form is perfected by

delivery when delivery of the certificated security occurs under KRS 355.8 -301 and

remains per fected by delivery until the debtor obtains possession of the security

certificate.

(6) A person in possession of collateral is not required to acknowledge that it holds

possession for a secured party's benefit.

(7) If a person acknowledges that it holds possession for the secured party's benefit:

(a) The acknowledgment is effective under sub section (3) of this section or KRS

355.8-301(1), even if the acknowledgment violates the rights of a debtor; and

(b) Unless the person otherwise agrees or law other than this article otherwise

provides, the person does not owe any duty to the secured party and is not

required to confirm the acknowledgment to another person.

(8) A secured party having possession of collateral does not relinquish possession by

delivering the collateral to a person other than the debtor or a lessee of the collateral

from the d ebtor in the ordinary course of the debtor's business if the person was

instructed before the delivery or is instructed contemporaneously with the delivery:

(a) To hold possession of the collateral for the secured party's benefit; or

(b) To redeliver the collateral to the secured party.

(9) (a) A secured party does not relinquish possession, even if a delivery under

subsection (8) of this section violates the rights of a debtor.

(b) A person to which collateral is delivered under subsection (8) of this sect ion

does not owe any duty to the secured party and is not required to confirm the

delivery to another person unless the person otherwise agrees or law other

than this article otherwise provides.