{"data":{"id":"us-ky/krs-355.9-207","jurisdiction":"us-ky","citation":"KRS 355.9-207","heading":"Rights and duties of secured party having possession or control of","body":"collateral.\n(1) Except as otherwise provided in subsection (4) of this section:\n(a) A secured party shall use reasonable care in the custody and preservation of\ncollateral in the secured party's possession; and\n(b) In the case of chattel paper or an instrument, reasonable care includes taking\nnecessary steps to preserve rights against prior parties unless otherwise\nagreed.\n(2) Except as otherwise provided in subsection (4) of this section, if a secured party has\npossession of collateral:\n(a) Reasonable expenses, including the cost of insurance and payment of taxes or\nother charges, incurred in the custody, preservation, use, or operation of the\ncollateral are chargeable to the debtor and are secured by the collateral;\n(b) The risk of accidental loss or damage is on the debtor to the extent of a\ndeficiency in any effective insurance coverage;\n(c) The secured party shall keep the collateral identifiable, but fungible coll ateral\nmay be commingled; and\n(d) The secured party may use or operate the collateral:\n1. For the purpose of preserving the collateral or its value;\n2. As permitted by an order of a court having competent jurisdiction; or\n3. Except in the case of consumer goods, in the manner and to the extent\nagreed by the debtor.\n(3) Except as otherwise provided in subsection (4) of this section, a secured party\nhaving possession of collateral or control of collateral under KRS 355.7-106, 355.9-\n104, 355.9-105, 355.9-1051, 355.9-106, 355.9-107, or 355.9-1071:\n(a) May hold as additional security any proceeds, except money or funds,\nreceived from the collateral;\n(b) Shall apply money or funds received from the collateral to reduce the secured\nobligation, unless remitted to the debtor; and\n(c) May create a security interest in the collateral.\n(4) If the secured party is a buyer of accounts, chattel paper, payment intangibles,  or\npromissory notes or a consignor:\n(a) Subsection (1) of this section does not apply unless the secured party is\nentitled under an agreement:\n1. To charge back uncollected collateral; or\n2. Otherwise to full or limited recourse against the debtor or a se condary\nobligor based on the nonpayment or other default of an account debtor\nor other obligor on the collateral; and\n(b) Subsections (2) and (3) of this section do not apply.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=55676","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:47Z","sha256":"4de95c9e0eeb57e6a8227e2a58afd0bec595822c3621ab8c7b3fa87d59f82a59","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.9-206","next":"us-ky/krs-355.9-208"},"notice":"GroundRules: Original legal text. Not legal advice."}