KRS 355.9-334: Priority of security interests in fixtures and crops.

(1) (a) A security interest under this article may be created in goods that are fixtures

or may continue in goods that become fixtures.

(b) A security interest does not exist under this article in ordinary building

materials incorporated into an improvement on land.

(2) This article does not prevent creation of an encumbrance upon fixtures under real

property law.

(3) In cases not governed by subsections (4) to (8) of this section, a security interest in

fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the

related real property other than the debtor.

(4) Except as otherwise provided in subsection (8) of this section, a perfected security

interest in fi xtures has priority over a conflicting interest of an encumbrancer or

owner of the real property if the debtor has an interest of record in or is in

possession of the real property and:

(a) The security interest is a purchase-money security interest;

(b) The interest of the encumbrancer or owner arises before the goods become

fixtures; and

(c) The security interest is perfected by a fixture filing before the goods become

fixtures or within twenty (20) days thereafter.

(5) A perfected security interest in fixtures has priority over a conflicting interest of an

encumbrancer or owner of the real property if:

(a) The debtor has an interest of record in the real property or is in possession of

the real property and the security interest:

1. Is perfected by a fixture filing before the interest of the encumbrancer or

owner is of record; and

2. Has priority over any conflicting interest of a predecessor in title of the

encumbrancer or owner;

(b) Before the goods become fixtures, the security interest is perfected by any

method permitted by this article and the fixtures are readily removable:

1. Factory or office machines;

2. Equipment that is not primarily used or leased for use in the operation of

the real property; or

3. Replacements of domestic appliances that are consumer goods;

(c) The conflicting interest is a lien on the real property obtained by legal or

equitable proceedings after the security interest was perfected by any method

permitted by this article; or

(d) The security interest is:

1. Created in a manufactured home in a manufactured -home transaction;

and

2. Perfected pursuant to a statute described in KRS 355.9-311(1)(b).

(6) A security interest in fixtures, whether or not perfected, has priority over a

conflicting interest of an encumbrancer or owner of the real property if:

(a) The encumbrancer or owner has, in a signed record, consented to the security

interest or disclaimed an interest in the goods as fixtures; or

(b) The debtor has a right to remove the goods as aga inst the encumbrancer or

owner.

(7) The priority of the security interest under subsection (6)(b) of this section continues

for a reasonable time if the debtor's right to remove the goods as against the

encumbrancer or owner terminates.

(8) (a) A mortgage is a construction mortgage to the extent that it secures an

obligation incurred for the construction of an improvement on land, including

the acquisition cost of the land, if a recorded record of the mortgage so

indicates.

(b) Except as otherwise provided in subsections (5) and (6) of this section, a

security interest in fixtures is subordinate to a construction mortgage if a

record of the mortgage is recorded before the goods become fixtures and the

goods become fixtures before the completion of the constr uction. A mortgage

has this priority to the same extent as a construction mortgage to the extent

that it is given to refinance a construction mortgage.

(9) A perfected security interest in crops growing on real property has priority over a

conflicting interest of an encumbrancer or owner of the real property if the debtor

has an interest of record in or is in possession of the real property.