{"data":{"id":"us-ky/krs-355.2a-309","jurisdiction":"us-ky","citation":"KRS 355.2A-309","heading":"Lessor's and lessee's rights when goods become fixtures.","body":"(1) In this section:\n(a) Goods are \"fixtures\" when they become so related to particular real estate that\nan interest in them arises under real estate law;\n(b) A \"fixture filing\" is the filing, in the office where a record of a mortgage on\nthe real estate would  be filed or recorded, of a financing statement covering\ngoods that are or are to become fixtures and conforming to the requirements\nof KRS 355.9-502(1) and (2);\n(c) A lease is a \"purchase money lease\" unless the lessee has possession or use of\nthe goods o r the right to possession or use of the goods before the lease\nagreement is enforceable;\n(d) A mortgage is a \"construction mortgage\" to the extent it secures an obligation\nincurred for the construction of an improvement on land including the\nacquisition cost of the land, if the recorded writing so indicates; and\n(e) \"Encumbrance\" includes real estate mortgages and other liens on real estate\nand all other rights in real estate that are not ownership interests.\n(2) Under this article a lease may be of goods that are fixtures or may continue in goods\nthat become fixtures, but no lease exists under this article of ordinary building\nmaterials incorporated into an improvement on land.\n(3) This article does not prevent creation of a lease of fixtures pursuant to re al estate\nlaw.\n(4) The perfected interest of a lessor of fixtures has priority over a conflicting interest\nof an encumbrancer or owner of the real estate if:\n(a) The lease is a purchase money lease, the conflicting interest of the\nencumbrancer or owner ari ses before the goods become fixtures, the interest\nof the lessor is perfected by a fixture filing before the goods become fixtures\nor within ten (10) days thereafter, and the lessee has an interest of record in\nthe real estate or is in possession of the real estate; or\n(b) The interest of the lessor is perfected by a fixture filing before the interest of\nthe encumbrancer or owner is of record, the lessor's interest has priority over\nany conflicting interest of a predecessor in title of the encumbrancer or owner,\nand the lessee has an interest of record in the real estate or is in possession of\nthe real estate.\n(5) The interest of a lessor of fixtures, whether or not perfected, has priority over the\nconflicting interest of an encumbrancer or owner of the real estate if:\n(a) The fixtures are readily removable factory or office machines, readily\nremovable equipment that is not primarily used or leased for use in the\noperation of the real estate, or readily removable replacements of domestic\nappliances that are g oods subject to a consumer lease, and before the goods\nbecome fixtures the lease contract is enforceable; or\n(b) The conflicting interest is a lien on the real estate obtained by legal or\nequitable proceedings after the lease contract is enforceable; or\n(c) The encumbrancer or owner has consented in writing to the lease or has\ndisclaimed an interest in the goods as fixtures; or\n(d) The lessee has a right to remove the goods as against the encumbrancer or\nowner. If the lessee's right to remove terminates, the priority of the interest of\nthe lessor continues for a reasonable time.\n(6) Notwithstanding subsection (4)(a) but otherwise subject to subsections (4) and (5),\nthe interest of a lessor of fixtures, including the lessor's residual interest, is\nsubordinate to the conflicting interest of an encumbrancer of the real estate under a\nconstruction mortgage recorded before the goods become fixtures if the goods\nbecome fixtures before the completion of the construction. To the extent given to\nrefinance a construc tion mortgage, the conflicting interest of an encumbrancer of\nthe real estate under a mortgage has this priority to the same extent as the\nencumbrancer of the real estate under the construction mortgage.\n(7) In cases not within the preceding subsections, p riority between the interest of a\nlessor of fixtures, including the lessor's residual interest, and the conflicting interest\nof an encumbrancer or owner of the real estate who is not the lessee is determined\nby the priority rules governing conflicting interests in real estate.\n(8) If the interest of a lessor of fixtures including the lessor's residual interest, has\npriority over all conflicting interests of all owners and encumbrancers of the real\nestate, the lessor or the lessee may:\n(a) On default, expiration, termination, or cancellation of the lease agreement but\nsubject to the lease agreement and this article; or\n(b) If necessary to enforce other rights and remedies of the lessor or lessee under\nthis article;\nremove the goods from the real estate, free  and clear of all conflicting interests of\nall owners and encumbrancers of the real estate, but the lessor or lessee must\nreimburse any encumbrancer or owner of the real estate who is not the lessee and\nwho has not otherwise agreed for the cost of repair o f any physical injury, but not\nfor any diminution in value of the real estate caused by the absence of the goods\nremoved or by any necessity of replacing them. A person entitled to reimbursement\nmay refuse permission to remove until the party seeking remov al gives adequate\nsecurity for the performance of this obligation.\n(9) Even though the lease agreement does not create a security interest, the interest of a\nlessor of fixtures, including the lessor's residual interest, is perfected by filing a\nfinancing statement as a fixture filing for leased goods that are or are to become\nfixtures in accordance with the relevant provisions of the article on secured\ntransactions (Article 9).","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=33387","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:43Z","sha256":"5ad693fd564ec169a5325d9e1aeb90a3faae0e022c4350a355dbeddcdca7eaae","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.2a-308","next":"us-ky/krs-355.2a-310"},"notice":"GroundRules: Original legal text. Not legal advice."}