{"data":{"id":"us-ky/krs-355.9-615","jurisdiction":"us-ky","citation":"KRS 355.9-615","heading":"Application of proceeds of disposition -- Liability for deficiency and right","body":"to surplus.\n(1) A secured party shall apply or pay over for application the cash proceeds of\ndisposition under KRS 355.9-610 in the following order to:\n(a) The reasonable expenses of retaking, holding, preparing for disposition,\nprocessing, and disposing, and, to the extent provided for by agreement and\nnot prohibited by law, reasonable attorney's fees and legal expenses incurred\nby the secured party;\n(b) The satisfaction of obligations secured by the security interest or agricultural\nlien under which the disposition is made;\n(c) The satisfaction of obligations secured by any subordinate security interest in\nor other subordinate lien on the collateral if:\n1. The secured party receives from the holder of the subordinate security\ninterest or other lien a signed demand for proceeds before distribution of\nthe proceeds is completed; and\n2. In a case in which a consignor has an interest in the collateral, the\nsubordinate security interest or other lien is senior to the interest of the\nconsignor; and\n(d) A secured party that is a consignor of the collateral if the secured party\nreceives from the consignor a signed demand for proceeds before distribution\nof the proceeds is completed.\n(2) If requested by a secured party, a holder of a subordinate security interest or other\nlien shall furnish reasonable proof of the interest or lien within a reasonable time.\nUnless the holder does so, the secured party need not comply with the holder's\ndemand under subsection (1)(c) of this section.\n(3) (a) A secured party need not apply or pay over for application noncash proceeds\nof disposition under KRS 355.9 -610 unless the failure to do so would be\ncommercially unreasonable.\n(b) A secured party that applies or pays over for application noncash proceeds\nshall do so in a commercially reasonable manner.\n(4) If the security interest under which a disposition is made secures payment or\nperformance of an obligation, after making the payments and applications required\nby subsection (1) of this section and permitted by subsection (3) of this section:\n(a) Unless subsection (1)(d) of this section requires the secured party to apply or\npay over cash proceeds to a consignor, the secured party shall account to and\npay a debtor for any surplus; and\n(b) The obligor is liable for any deficiency.\n(5) If the underlying transaction is a sale of accounts, chattel paper, payment\nintangibles, or promissory notes:\n(a) The debtor is not entitled to any surplus; and\n(b) The obligor is not liable for any deficiency.\n(6) The surplus or deficiency following a disposition is calculated based on the amount\nof proceeds that would have been realized in a disposition complying with this part\nof this article to a transferee other than the secured party, a person related to the\nsecured party, or a secondary obligor if:\n(a) The transferee in the disposition is the secured party, a person related to the\nsecured party, or a secondary obligor; and\n(b) The amount of proceeds of the disposition is significantly below the range of\nproceeds that a complying disposition to a person other than the secured party,\na person related to the secured party, or a secondary obligor would have\nbrought.\n(7) A secured party that receives cash proceeds of a disposition in good faith and\nwithout knowledge that the rece ipt violates the rights of the holder of a security\ninterest or other lien that is not subordinate to the security interest or agricultural\nlien under which the disposition is made:\n(a) Takes the cash proceeds free of the security interest or other lien;\n(b) Is not obligated to apply the proceeds of the disposition to the satisfaction of\nobligations secured by the security interest or other lien; and\n(c) Is not obligated to account to or pay the holder of the security interest or other\nlien for any surplus.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=55711","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:49Z","sha256":"2d68059f4e3fed66d3115781db277c61cd3e0fdff3dd6b77758eb102c578d489","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.9-614","next":"us-ky/krs-355.9-616"},"notice":"GroundRules: Original legal text. Not legal advice."}