KRS 355.9-628: Nonliability and limitation on liability of secured party -- Liability of

secondary obligor.

(1) Subject to subsection (6) of this section, unless a secured party knows that a person

is a debtor or obligor, knows the identity of the p erson, and knows how to

communicate with the person:

(a) The secured party is not liable to the person, or to a secured party or

lienholder that has filed a financing statement against the person, for failure to

comply with this article; and

(b) The secure d party's failure to comply with this article does not affect the

liability of the person for a deficiency.

(2) Subject to subsection (6) of this section, a secured party is not liable because of its

status as secured party:

(a) To a person that is a debtor or obligor, unless the secured party knows:

1. That the person is a debtor or obligor;

2. The identity of the person; and

3. How to communicate with the person; or

(b) To a secured party or lienholder that has filed a financing statement against a

person, unless the secured party knows:

1. That the person is a debtor; and

2. The identity of the person.

(3) A secured party is not liable to any person, and a person's liabi lity for a deficiency

is not affected, because of any act or omission arising out of the secured party's

reasonable belief that a transaction is not a consumer -goods transaction or a

consumer transaction or that goods are not consumer goods, if the secured party's

belief is based on its reasonable reliance on:

(a) A debtor's representation concerning the purpose for which collateral was to

be used, acquired, or held; or

(b) An obligor's representation concerning the purpose for which a secured

obligation was incurred.

(4) A secured party is not liable to any person under KRS 355.9 -625(3)(b) for its

failure to comply with KRS 355.9-616.

(5) A secured party is not liable under KRS 355.9 -625(3)(b) more than once with

respect to any one (1) secured obligation.

(6) Subsections (1) and (2) of this section do not apply to limit the liability of a secured

party to a person if, at the time the secured party obtains control of collateral that is

a controllable account, controllable electronic record, or controllable pa yment

intangible or at the time the security interest attaches to the collateral, whichever is

later:

(a) The person is a debtor or obligor; and

(b) The secured party knows that the information in subsection (2)(a)1., 2., or 3.

of this section relating to the person is not provided by the collateral, a record

attached to or logically associated with the collateral, or the system in which

the collateral is recorded.