KRS 355.9-324: Priority of purchase-money security interests.

(1) Except as otherwise provided in subsection (7) of this section, a perfected purchase-

money security interest in goods other than inventory or livestock has priority over

a conflicting security interest in the same goods, and, except as otherwise provided

in KRS 355.9-327, a perfected security interest in its identifiable proceeds also has

priority, if the purchase -money security interest is perfected when the debtor

receives possession of the collateral or within twenty (20) days thereafter.

(2) Subject to subsection (3) of this section and except as otherwise provided in

subsection (7) of this section, a perfected purchase -money security interest in

inventory has priority over a conflicting security interest in the same inventory, has

priority over a confli cting security interest in chattel paper or an instrument

constituting proceeds of the inventory and in proceeds of the chattel paper, if so

provided in KRS 355.9 -330, and, except as otherwise provided in KRS 355.9 -327,

also has priority in identifiable ca sh proceeds of the inventory to the extent the

identifiable cash proceeds are received on or before the delivery of the inventory to

a buyer, if:

(a) The purchase -money security interest is perfected when the debtor receives

possession of the inventory;

(b) The purchase-money secured party sends a signed notification to the holder of

the conflicting security interest;

(c) The holder of the conflicting security interest receives the notification within

five (5) years before the debtor receives possession of the inventory; and

(d) The notification states that the person sending the notification has or expects

to acquire a purchase -money security interest in inventory of the debtor and

describes the inventory.

(3) Subsection (2)(b) to (d) of this section apply only if the holder of the conflicting

security interest had filed a financing statement covering the same types of

inventory:

(a) If the purchase -money security interest is perfected by filing, before the date

of the filing; or

(b) If the purchase-money security interest is temporarily perfected without filing

or possession under KRS 355.9 -312(6), before the beginning of the twenty

(20) day period thereunder.

(4) Subject to subsection (5) of this section and except as otherwise provided in

subsection (7) of this section, a perfected purchase -money security interest in

livestock that are farm products has priority over a conflicting security interest in

the same livestock, and, except as otherwise provided in KRS 355.9 -327, a

perfected security interest in th eir identifiable proceeds and identifiable products in

their unmanufactured states also has priority, if:

(a) The purchase -money security interest is perfected when the debtor receives

possession of the livestock;

(b) The purchase-money secured party sends a signed notification to the holder of

the conflicting security interest;

(c) The holder of the conflicting s ecurity interest receives the notification within

six (6) months before the debtor receives possession of the livestock; and

(d) The notification states that the person sending the notification has or expects

to acquire a purchase -money security interest i n livestock of the debtor and

describes the livestock.

(5) Subsection (4)(b) to (d) of this section apply only if the holder of the conflicting

security interest had filed a financing statement covering the same types of

livestock:

(a) If the purchase -money security interest is perfected by filing, before the date

of the filing; or

(b) If the purchase-money security interest is temporarily perfected without filing

or possession under KRS 355.9 -312(6), before the beginning of the twenty

(20) day period thereunder.

(6) Except as otherwise provided in subsection (7) of this section, a perfected purchase-

money security interest in software has priority over a conflicting security interest

in the same collateral, and, except as otherwise provided in KRS 355.9 -327, a

perfected security interest in its identifiable proceeds also has priority, to the extent

that the purchase -money security interest in the goods in which the software was

acquired for use has priority in the goods and proceeds of the goods under this

section.

(7) If more than one (1) security interest qualifies for priority in the same collateral

under subsection (1), (2), (4), or (6) of this section:

(a) A security interest securing an obligation incurred as all or part of the price of

the collateral h as priority over a security interest securing an obligation

incurred for value given to enable the debtor to acquire rights in or the use of

collateral; and

(b) In all other cases, KRS 355.9 -322(1) applies to the qualifying security

interests.