CHAPTER 159 HOUSE BILL No. 2709 An Act concerning the uniform commercial code; relating to secured and other transactions
thereunder; amending K.S.A. 34-2,101, 34-2,112, 58-204, 58-244, 66-1217, 66-1219, 79-
2616 and 79-2617 and K.S.A. 2001 Supp. 17-630, 84-1-105, 84-9-102, 84-9-104, 84-9-
109, 84-9-306, 84-9-311, 84-9-316, 84-9-317, 84-9-331, 84-9-334, 84-9-406, 84-9-509,
84-9-513, 84-9-515, 84-9-525, 84-9-608, 84-9-613, 84-9-615, 84-9-625, 84-9-628, 84-9-
702 and 84-9-705 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 2001 Supp. 17-630 is hereby amended to read as
follows: 17-630. Every mortgage or deed of trust, or satisfaction thereof,
covering any real or personal property situated in this state, made to
secure the payment of bonds issued or to be issued thereafter by any
corporation which is an interstate gas pipeline company, or by any public
utility as defined in K.S.A. 66-104 and amendments thereto except noth-
ing herein shall apply to or affect railroad corporations, and every mort-
gage or deed of trust, or satisfaction thereof, covering any real or personal
property situated in this state made to secure any indebtedness incurred
under the rural electrification act of 1936, as amended (U.S. code, title
7, chapter 31), shall be executed and duly acknowledged and certified, as
other instruments affecting real estate. Such mortgage or deed of trust,
or satisfaction thereof shall be filed in the office of the secretary of state
accompanied by the form prescribed by K.S.A. 84-9-521(a), and amend-
ments thereto, which must indicate in box 10 of the form that the instru-
ment is filed in accordance with this section. The secretary shall certify
that the instrument has been filed in the secretary's office by endorsing
upon the original signed instrument the word ``filed'' and the date and
hour of its filing. This endorsement is the ``filing date'' of the instrument
and is conclusive of the date and time of its filing in the absence of actual
fraud. The secretary of state shall thereupon file and index the endorsed
instrument in accordance with part 5 of article 9 of the uniform com-
mercial code, and amendments thereto. The instrument shall be effective
upon the record until terminated and the secretary of state shall remove
the record one year after termination. The filing of such instrument in
the office of the secretary of state shall be notice to all persons of the
contents thereof and to all subsequent purchasers and encumbrancers of
the rights and interests of the parties thereto as to property described in
the filed instrument and property acquired subsequent to the execution
thereof if the instrument so provides. Notwithstanding any provision of
law to the contrary, no other filing of any such instrument shall be nec-
essary. Any such mortgage or deed of trust filed in the office of the reg-
ister of deeds of any county in this state may be refiled in the office of
the secretary of state in the manner provided in this section. Such refiling
shall thereafter as to any property not previously released from such mort-
gage or deed of trust be of the same effect as if the instrument had been
originally filed in the office of the secretary of state. The secretary of state
shall charge the same filing and information retrieval fees and credit the
amounts in the same manner as financing statements filed under part 5
of article 9 of the uniform commercial code, and amendments thereto.

      Sec.  2. K.S.A. 58-244 is hereby amended to read as follows: 58-244.
(a) To be perfected, the lien must have attached and the supplier entitled
to the lien must have filed a lien-notification statement in the form pro-
vided for in K.S.A. 58-242, and amendments thereto, accompanied by the
form prescribed by K.S.A. 84-9-521(a), and amendments thereto, which
must indicate in box 10 of the form that the lien is filed in accordance
with this section, with the appropriate filing office under K.S.A. 84-9-401
84-9-501 and amendments thereto within 20 days after the last date that
agricultural production input was furnished. A lien-notification statement
filed pursuant to this section shall include the date which notice was
mailed to the lender and a statement signed by the supplier indicating
that the lender did not respond to the lien-notification statement.

      (b) Subject to the provisions of subsection (d) of K.S.A. 58-242, and
amendments thereto, a lien that is not perfected shall be entitled to the
same priority as an unperfected security interest as determined by K.S.A.
84-9-312 part 3 of article 9 of the uniform commercial code and amend-
ments thereto.

      (c) The filing officer shall file, index, amend, maintain, remove and
destroy the lien-notification statement in the same manner as a financing
statement filed under part 4 5 of article 9 of the uniform commercial code
and amendments thereto. The secretary of state filing officer shall charge
the same filing and information retrieval fees and credit the amounts in
the same manner as financing statements filed under part 4 5 of article
9 of the uniform commercial code and amendments thereto.

      Sec.  3. K.S.A. 66-1217 is hereby amended to read as follows: 66-
1217. Any mortgage of real property or of both real property and personal
property, including fixtures, or a security interest in fixtures alone, made
by a corporation which is a railroad company as defined in K.S.A. 66-180,
and amendments thereto, or a public utility as defined in K.S.A. 66-104,
and amendments thereto, shall be recorded in the office of the register
of deeds of the county or counties in which the real property is located,
and when so recorded shall be a lien on the real property and fixtures
described in the mortgage or security agreement from the time of re-
cording and,. If the instrument so provides, the instrument shall be a lien
on any real property and fixtures thereafter acquired subject to the mort-
gage or security agreement from the time of acquisition. If said such
mortgage or security agreement includes personal property, a copy of said
such mortgage or security agreement certified as true by the debtor or
creditor, or an officer of either, shall also be filed with the secretary of
state, and when in accordance with part 5 of article 9 of the uniform
commercial code and amendments thereto and accompanied by the form
prescribed by K.S.A. 84-9-521(a), and amendments thereto, which must
indicate in box 10 of the form that the lien is filed in accordance with this
section. When so filed the mortgage or security agreement shall be a lien
on said such property described in said such mortgage or security agree-
ment from the time of said such filing, and if the instrument so provides,
shall be a lien on any property thereafter acquired subject to the mortgage
or security agreement from the time of acquisition, and. The lien thereon
shall be enforceable in accordance with the laws of this state governing
mortgages of real estate. No other recording or filing of any such instru-
ment shall be necessary, notwithstanding the provisions of any other stat-
ute. The instrument shall be effective upon the record until terminated
and the filing officer shall remove the record one year after termination.

      Sec.  4. K.S.A. 66-1219 is hereby amended to read as follows: 66-
1219. The secretary of state shall maintain a file for mortgages, security
agreements, and releases thereof of railroads and public utilities filed
pursuant to this act, and he shall receive for such filing a fee of five dollars
($5). The secretary of state shall charge the same filing and information
retrieval fees and credit the amounts in the same manner as financing
statements filed under part 5 of article 9 of the uniform commercial code
and amendments thereto.

      Sec.  5. K.S.A. 79-2616 is hereby amended to read as follows: 79-
2616. (a) If a notice of federal lien, a refiling of a notice of federal lien
or a notice of revocation of any certificate described in subsection (b) is
presented to a filing officer who is:

      (1) The secretary of state, the secretary shall cause the notice to be
marked, held and indexed in accordance with the provisions of subsection
(4) of K.S.A. 84-9-403 part 5 of article 9 of the uniform commercial code,
and amendments thereto, as if the notice were a financing statement
within the meaning of the uniform commercial code, except the notice
shall remain filed for 10 years from the date of filing, if the date of filing
was on or after November 5, 1990, and liens filed prior to November 5,
1990, shall remain on file for a period of four years from the close of the
preceding required refiling period; or

      (2) any other officer described in K.S.A. 79-2614, and amendments
thereto, the officer shall endorse thereon the officer's identification and
the date and time of receipt and file it alphabetically or enter it in an
alphabetical index showing the name and address of the person named
in the notice; the date and time of receipt, the title and address of the
official or entity certifying the lien and the total amount appearing on the
notice of lien.

      (b) If a certificate of release, nonattachment, discharge or subordi-
nation of any lien is presented to the secretary of state for filing, the
secretary shall:

      (1) Cause a certificate of release or nonattachment to be marked, held
and indexed as if the certificate were a termination statement within the
meaning of the uniform commercial code; and

      (2) cause a certificate of discharge or subordination to be marked,
held and indexed as if the certificate were a release of collateral within
the meaning of the uniform commercial code.

      (c) If a refiled notice of federal lien referred to in subsection (a) or
any of the certificates or notices referred to in subsection (b) is presented
for filing to any other filing officer specified in K.S.A. 79-2614, and
amendments thereto, such officer shall enter the refiled notice or the
certificate with the date of filing in any alphabetical lien index.

      (d) Upon request of any person, the filing officer shall issue a certif-
icate showing whether there is on file, on the date and hour stated therein,
any notice of lien or certificate or notice affecting any lien filed pursuant
to this act or pursuant to the uniform federal tax lien registration act,
K.S.A. 79-2608 et seq., and amendments thereto, as it existed prior to the
effective date of this act, naming a particular person, and if a notice or
certificate is on file, giving the date and hour of filing of each notice or
certificate. The fee for a certificate is $5. Upon request, the filing officer
shall furnish a copy of any notice of federal lien, or notice or certificate
affecting a federal lien, for a fee of $.25 per page, unless the filing officer
is the secretary of state, in which case, the fee shall be an amount fixed
by the secretary of state and approved by the director of accounts and
reports pursuant to K.S.A. 45-204, and amendments thereto.

      Sec.  6. K.S.A. 79-2617 is hereby amended to read as follows: 79-
2617. The fee for filing and indexing each notice of lien or certificate or
notice affecting the lien is:

      (1) For a lien on real estate, $5;

      (2) for a lien on tangible and intangible personal property, $5;

      (3) for a certificate of discharge or subordination, $5; and

      (4) for all other notices, except for a certificate of release or nonat-
tachment, $2. The filing officer shall charge the same filing and infor-
mation retrieval fees and credit the amounts in the same manner as fi-
nancing statements filed under part 5 of article 9 of the uniform
commercial code and amendments thereto.

      Sec.  7. K.S.A. 2001 Supp. 84-9-102 is hereby amended to read as
follows: 84-9-102. (a) Definitions. In this article:

      (1) ``Accession'' means goods that are physically united with other
goods in such a manner that the identity of the original goods is not lost.

      (2) ``Account,'' except as used in ``account for,'' means a right to pay-
ment of a monetary obligation, whether or not earned by performance,
(A) for property that has been or is to be sold, leased, licensed, assigned,
or otherwise disposed of, (B) for services rendered or to be rendered, (C)
for a policy of insurance issued or to be issued, (D) for a secondary ob-
ligation incurred or to be incurred, (E) for energy provided or to be
provided, (F) for the use or hire of a vessel under a charter or other
contract, (G) arising out of the use of a credit or charge card or infor-
mation contained on or for use with the card, or (H) as winnings in a
lottery or other game of chance operated or sponsored by a state, gov-
ernmental unit of a state, or person licensed or authorized to operate the
game by a state or governmental unit of a state. The term includes health-
care-insurance receivables. The term does not include: (A) rights to pay-
ment evidenced by chattel paper or an instrument, (B) commercial tort
claims, (C) deposit accounts, (D) investment property, (E) letter-of-credit
rights or letters of credit, or (F) rights to payment for money or funds
advanced or sold, other than rights arising out of the use of a credit or
charge card or information contained on or for use with the card.

      (3) ``Account debtor'' means a person obligated on an account, chattel
paper, or general intangible. The term does not include persons obligated
to pay a negotiable instrument, even if the instrument constitutes part of
chattel paper.

      (4) ``Accounting,'' except as used in ``accounting for,'' means a record:

      (A) Authenticated by a secured party;

      (B) indicating the aggregate unpaid secured obligations as of a date
not more than 35 days earlier or 35 days later than the date of the record;
and

      (C) identifying the components of the obligations in reasonable de-
tail.

      (5) ``Agricultural lien'' means an interest, other than a security inter-
est, in farm products: (A) Which secures payment or performance of an
obligation for:

      (i) Goods or services furnished in connection with a debtor's farming
operation; or

      (ii) rent on real property leased by a debtor in connection with its
farming operation;

      (B) which is created by statute in favor of a person that:

      (i) In the ordinary course of its business furnished goods or services
to a debtor in connection with a debtor's farming operation; or

      (ii) leased real property to a debtor in connection with the debtor's
farming operation; and

      (C) whose effectiveness does not depend on the person's possession
of the personal property. Agricultural lien shall not include statutory liens.

      (6) ``As-extracted collateral'' means: (A) Oil, gas, or other minerals
that are subject to a security interest that:

      (i) Is created by a debtor having an interest in the minerals before
extraction; and

      (ii) attaches to the minerals as extracted; or

      (B) accounts arising out of the sale at the wellhead or minehead of
oil, gas, or other minerals in which the debtor had an interest before
extraction.

      (7) ``Authenticate'' means:

      (A) To sign; or

      (B) to execute or otherwise adopt a symbol, or encrypt or similarly
process a record in whole or in part, with the present intent of the au-
thenticating person to identify the person and adopt or accept a record.

      (8) ``Bank'' means an organization that is engaged in the business of
banking. The term includes savings banks, savings and loan associations,
credit unions, and trust companies.

      (9) ``Cash proceeds'' means proceeds that are money, checks, deposit
accounts, or the like.

      (10) ``Certificate of title'' means a certificate of title with respect to
which a statute provides for the security interest in question to be indi-
cated on the certificate as a condition or result of the security interest's
obtaining priority over the rights of a lien creditor with respect to the
collateral.

      (11) ``Chattel paper'' means a record or records that evidence both a
monetary obligation and a security interest in specific goods, a security
interest in specific goods and software used in the goods, a security in-
terest in specific goods and license of software used in the goods, a lease
of specific goods, or a lease of specific goods and license of software used
in the goods. In this subsection, ``monetary obligation'' means a monetary
obligation secured by the goods or owed under a lease of the goods and
includes a monetary obligation with respect to software used in the goods.
The term does not include (i) charters or other contracts involving the
use or hire of a vessel or (ii) records that evidence a right to payment
arising out of the use of a credit or charge card or information contained
on or for use with the card. If a transaction is evidenced by records that
include an instrument or series of instruments, the group of records taken
together constitutes chattel paper.

      (12) ``Collateral'' means the property subject to a security interest or
agricultural lien. The term includes:

      (A) Proceeds to which a security interest attaches;

      (B) accounts, chattel paper, payment intangibles, and promissory
notes that have been sold; and

      (C) goods that are the subject of a consignment.

      (13) ``Commercial tort claim'' means a claim arising in tort with re-
spect to which:

      (A) The claimant is an organization; or

      (B) the claimant is an individual and the claim:

      (i) arose in the course of the claimant's business or profession; and

      (ii) does not include damages arising out of personal injury to or the
death of an individual.

      (14) ``Commodity account'' means an account maintained by a com-
modity intermediary in which a commodity contract is carried for a com-
modity customer.

      (15) ``Commodity contract'' means a commodity futures contract, an
option on a commodity futures contract, a commodity option, or another
contract if the contract or option is:

      (A) Traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract pursuant to
federal commodities laws; or

      (B) traded on a foreign commodity board of trade, exchange, or mar-
ket, and is carried on the books of a commodity intermediary for a com-
modity customer.

      (16) ``Commodity customer'' means a person for which a commodity
intermediary carries a commodity contract on its books.

      (17) ``Commodity intermediary'' means a person that:

      (A) Is registered as a futures commission merchant under federal
commodities law; or

      (B) in the ordinary course of its business provides clearance or set-
tlement services for a board of trade that has been designated as a contract
market pursuant to federal commodities law.

      (18) ``Communicate'' means:

      (A) To send a written or other tangible record;

      (B) to transmit a record by any means agreed upon by the persons
sending and receiving the record; or

      (C) in the case of transmission of a record to or by a filing office, to
transmit a record by any means prescribed by filing-office rule.

      (19) ``Consignee'' means a merchant to which goods are delivered in
a consignment.

      (20) ``Consignment'' means a transaction, regardless of its form, in
which a person delivers goods to a merchant for the purpose of sale and:
(A) The merchant:

      (i) Deals in goods of that kind under a name other than the name of
the person making delivery;

      (ii) is not an auctioneer; and

      (iii) is not generally known by its creditors to be substantially engaged
in selling the goods of others;

      (B) with respect to each delivery, the aggregate value of the goods is
$1,000 or more at the time of delivery;

      (C) the goods are not consumer goods immediately before delivery;
and

      (D) the transaction does not create a security interest that secures an
obligation.

      (21) ``Consignor'' means a person that delivers goods to a consignee
in a consignment.

      (22) ``Consumer debtor'' means a debtor in a consumer transaction.

      (23) ``Consumer goods'' means goods that are used or bought for use
primarily for personal, family, or household purposes.

      (24) ``Consumer-goods transaction'' means a consumer transaction in
which:

      (A) An individual incurs an obligation primarily for personal, family,
or household purposes; and

      (B) a security interest in consumer goods secures the obligation.

      (25) ``Consumer obligor'' means an obligor who is an individual and
who incurred the obligation as part of a transaction entered into primarily
for personal, family, or household purposes.

      (26) ``Consumer transaction'' means a transaction in which (i) an in-
dividual incurs an obligation primarily for personal, family, or household
purposes, (ii) a security interest secures the obligation, and (iii) the col-
lateral is held or acquired primarily for personal, family, or household
purposes. The term includes consumer-goods transactions.

      (27) ``Continuation statement'' means an amendment of a financing
statement which:

      (A) Identifies, by its file number, the initial financing statement to
which it relates; and

      (B) indicates that it is a continuation statement for, or that it is filed
to continue the effectiveness of, the identified financing statement.

      (28) ``Debtor'' means:

      (A) A person having an interest, other than a security interest or other
lien, in the collateral, whether or not the person is an obligor;

      (B) a seller of accounts, chattel paper, payment intangibles, or prom-
issory notes; or

      (C) a consignee.

      (29) ``Deposit account'' means a demand, time, savings, passbook, or
similar account maintained with a bank. The term does not include in-
vestment property or accounts evidenced by an instrument.

      (30) ``Document'' means a document of title or a receipt of the type
described in section (2) subsection (2) of K.S.A. 84-7-201 and amendments
thereto.

      (31) ``Electronic chattel paper'' means chattel paper evidenced by a
record or records consisting of information stored in an electronic me-
dium.

      (32) ``Encumbrance'' means a right, other than an ownership interest,
in real property. The term includes mortgages and other liens on real
property.

      (33) ``Equipment'' means goods other than inventory, farm products,
or consumer goods.

      (34) ``Farm products'' means goods, other than standing timber, with
respect to which the debtor is engaged in a farming operation and which
are: (A) Crops grown, growing, or to be grown, including:

      (i) Crops produced on trees, vines, and bushes; and

      (ii) aquatic goods produced in aquacultural operations;

      (B) livestock, born or unborn, including aquatic goods produced in
aquacultural operations;

      (C) supplies used or produced in a farming operation; or

      (D) products of crops or livestock in their unmanufactured states.

      (35) ``Farming operation'' means raising, cultivating, propagating, fat-
tening, grazing, or any other farming, livestock, or aquacultural operation.

      (36) ``File number'' means the number assigned to an initial financing
statement pursuant to subsection (a) of K.S.A. 2001 Supp. 84-9-519(a)
and amendments thereto.

      (37) ``Filing office'' means an office designated in K.S.A. 2001 Supp.
84-9-501 and amendments thereto as the place to file a financing state-
ment.

      (38) ``Filing-office rule'' means a rule adopted pursuant to K.S.A.
2001 Supp. 84-9-526 and amendments thereto.

      (39) ``Financing statement'' means a record or records composed of
an initial financing statement and any filed record relating to the initial
financing statement.

      (40) ``Fixture filing'' means the filing of a financing statement cov-
ering goods that are or are to become fixtures and satisfying subsections
(a) and (b) of K.S.A. 2001 Supp. 84-9-502(a) and (b) and amendments
thereto. The term includes the filing of a financing statement covering
goods of a transmitting utility which are or are to become fixtures.

      (41) ``Fixtures'' means goods that have become so related to partic-
ular real property that an interest in them arises under real property law.

      (42) ``General intangible'' means any personal property, including
things in action, other than accounts, chattel paper, commercial tort
claims, deposit accounts, documents, goods, instruments, investment
property, letter-of-credit rights, letters of credit, money, and oil, gas, or
other minerals before extraction. The term includes payment intangibles
and software.

      (43) ``Good faith'' means honesty in fact and the observance of rea-
sonable commercial standards of fair dealing.

      (44) ``Goods'' means all things that are movable when a security in-
terest attaches. The term includes (A) fixtures, (B) standing timber that
is to be cut and removed under a conveyance or contract for sale, (C) the
unborn young of animals, (D) crops grown, growing, or to be grown, even
if the crops are produced on trees, vines, or bushes, and (E) manufactured
homes. The term also includes a computer program embedded in goods
and any supporting information provided in connection with a transaction
relating to the program if (A) the program is associated with the goods in
such a manner that it customarily is considered part of the goods, or (B)
by becoming the owner of the goods, a person acquires a right to use the
program in connection with the goods. The term does not include a com-
puter program embedded in goods that consist solely of the medium in
which the program is embedded. The term also does not include ac-
counts, chattel paper, commercial tort claims, deposit accounts, docu-
ments, general intangibles, instruments, investment property, letter-of-
credit rights, letters of credit, money, or oil, gas, or other minerals before
extraction.

      (45) ``Governmental unit'' means a subdivision, agency, department,
county, parish, municipality, or other unit of the government of the
United States, a state, or a foreign country. The term includes an organ-
ization having a separate corporate existence if the organization is eligible
to issue debt on which interest is exempt from income taxation under the
laws of the United States.

      (46) ``Health-care-insurance receivable'' means an interest in or claim
under a policy of insurance which is a right to payment of a monetary
obligation for health-care goods or services provided.

      (47) ``Instrument'' means a negotiable instrument, a writing that
would otherwise qualify as a certificate of deposit (defined in subsection
(j) of K.S.A. 84-3-104, and amendments thereto) but for the fact that the
writing contains a limitation on transfer, or any other writing that evi-
dences a right to the payment of a monetary obligation, is not itself a
security agreement or lease, and is of a type that in ordinary course of
business is transferred by delivery with any necessary indorsement or
assignment. The term does not include (i) investment property, (ii) letters
of credit, or (iii) writings that evidence a right to payment arising out of
the use of a credit or charge card or information contained on or for use
with the card.

      (48) ``Inventory'' means goods, other than farm products, which:

      (A) Are leased by a person as lessor;

      (B) are held by a person for sale or lease or to be furnished under a
contract of service;

      (C) are furnished by a person under a contract of service; or

      (D) consist of raw materials, work in process, or materials used or
consumed in a business.

      (49) ``Investment property'' means a security, whether certificated or
uncertificated, security entitlement, securities account, commodity con-
tract, or commodity account.

      (50) ``Jurisdiction of organization,'' with respect to a registered or-
ganization, means the jurisdiction under whose law the organization is
organized.

      (51) ``Letter-of-credit right'' means a right to payment or perform-
ance under a letter of credit, whether or not the beneficiary has de-
manded or is at the time entitled to demand payment or performance.
The term does not include the right of a beneficiary to demand payment
or performance under a letter of credit.

      (52) ``Lien creditor'' means:

      (A) A creditor that has acquired a lien on the property involved by
attachment, levy, or the like;

      (B) an assignee for benefit of creditors from the time of assignment;

      (C) a trustee in bankruptcy from the date of the filing of the petition;
or

      (D) a receiver in equity from the time of appointment.

      (53) ``Manufactured home'' means a structure, transportable in one
or more sections, which, in the traveling mode, is eight body feet or more
in width or 40 body feet or more in length, or, when erected on site, is
320 or more square feet, and which is built on a permanent chassis and
designed to be used as a dwelling with or without a permanent foundation
when connected to the required utilities, and includes the plumbing,
heating, air conditioning, and electrical systems contained therein. The
term includes any structure that meets all of the requirements of this
paragraph except the size requirements and with respect to which the
manufacturer voluntarily files a certification required by the United States
Secretary of Housing and Urban Development and complies with the
standards established under Title 42 of the United States Code.

      (54) ``Manufactured-home transaction'' means a secured transaction:

      (A) That creates a purchase-money security interest in a manufac-
tured home, other than a manufactured home held as inventory; or

      (B) in which a manufactured home, other than a manufactured home
held as inventory, is the primary collateral.

      (55) ``Mortgage'' means a consensual interest in real property, in-
cluding fixtures, which secures payment or performance of an obligation.

      (56) ``New debtor'' means a person that becomes bound as a debtor
under subsection (d) of K.S.A. 2001 Supp. 84-9-203(d) and amendments
thereto by a security agreement previously entered into by another per-
son.

      (57) ``New value'' means (A) money, (B) money's worth in property,
services, or new credit, or (C) release by a transferee of an interest in
property previously transferred to the transferee. The term does not in-
clude an obligation substituted for another obligation.

      (58) ``Noncash proceeds'' means proceeds other than cash proceeds.

      (59) ``Obligor'' means a person that, with respect to an obligation
secured by a security interest in or an agricultural lien on the collateral,
(A) owes payment or other performance of the obligation, (B) has pro-
vided property other than the collateral to secure payment or other per-
formance of the obligation, or (C) is otherwise accountable in whole or
in part for payment or other performance of the obligation. The term
does not include issuers or nominated persons under a letter of credit.

      (60) ``Original debtor'' except as used in K.S.A. 2001 Supp. 84-9-
310(c), and amendments thereto means a person that, as debtor, entered
into a security agreement to which a new debtor has become bound under
subsection (d) of K.S.A. 2001 Supp. 84-9-203(d) and amendments thereto.

      (61) ``Payment intangible'' means a general intangible under which
the account debtor's principal obligation is a monetary obligation.

      (62) ``Person related to,'' with respect to an individual, means:

      (A) The spouse of the individual;

      (B) a brother, brother-in-law, sister, or sister-in-law of the individual;

      (C) an ancestor or lineal descendant of the individual or the individ-
ual's spouse; or

      (D) any other relative, by blood or marriage, of the individual or the
individual's spouse who shares the same home with the individual.

      (63) ``Person related to,'' with respect to an organization, means:

      (A) A person directly or indirectly controlling, controlled by, or under
common control with the organization;

      (B) an officer or director of, or a person performing similar functions
with respect to, the organization;

      (C) an officer or director of, or a person performing similar functions
with respect to, a person described in subparagraph (A);

      (D) the spouse of an individual described in subparagraph (A), (B),
or (C); or

      (E) an individual who is related by blood or marriage to an individual
described in subparagraph (A), (B), (C), or (D) and shares the same home
with the individual.

      (64) ``Proceeds'' except as used in K.S.A. 2001 Supp. 84-9-609(b), and
amendments thereto means the following property:

      (A) Whatever is acquired upon the sale, lease, license, exchange, or
other disposition of collateral;

      (B) whatever is collected on, or distributed on account of, collateral;

      (C) rights arising out of collateral;

      (D) to the extent of the value of collateral, claims arising out of the
loss, nonconformity, or interference with the use of, defects or infringe-
ment of rights in, or damage to, the collateral; or

      (E) to the extent of the value of collateral and to the extent payable
to the debtor or the secured party, insurance payable by reason of the
loss or nonconformity of, defects or infringement of rights in, or damage
to, the collateral.

      (65) ``Promissory note'' means an instrument that evidences a prom-
ise to pay a monetary obligation, does not evidence an order to pay, and
does not contain an acknowledgment by a bank that the bank has received
for deposit a sum of money or funds.

      (66) ``Proposal'' means a record authenticated by a secured party
which includes the terms on which the secured party is willing to accept
collateral in full or partial satisfaction of the obligation it secures pursuant
to K.S.A. 2001 Supp. 84-9-620, 84-9-621 and 84-9-622 and amendments
thereto.

      (67) ``Public-finance transaction'' means a secured transaction in con-
nection with which:

      (A) Debt securities are issued;

      (B) all or a portion of the securities issued have an initial stated ma-
turity of at least 20 years; and

      (C) the debtor, obligor, secured party, account debtor or other person
obligated on collateral, assignor or assignee of a secured obligation, or
assignor or assignee of a security interest is a state or a governmental unit
of a state.

      (68) (67) ``Pursuant to commitment,'' with respect to an advance
made or other value given by a secured party, means pursuant to the
secured party's obligation, whether or not a subsequent event of default
or other event not within the secured party's control has relieved or may
relieve the secured party from its obligation.

      (69) (68) ``Record,'' except as used in ``for record,'' ``of record,'' ``rec-
ord or legal title,'' and ``record owner,'' means information that is in-
scribed on a tangible medium or which is stored in an electronic or other
medium and is retrievable in perceivable form.

      (70) (69) ``Registered organization'' means an organization organized
solely under the law of a single state or the United States and as to which
the state or the United States must maintain a public record showing the
organization to have been organized.

      (71) (70) ``Secondary obligor'' means an obligor to the extent that:

      (A) The obligor's obligation is secondary; or

      (B) The obligor has a right of recourse with respect to an obligation
secured by collateral against the debtor, another obligor, or property of
either.

      (72) (71) ``Secured party'' means:

      (A) A person in whose favor a security interest is created or provided
for under a security agreement, whether or not any obligation to be se-
cured is outstanding;

      (B) a person that holds an agricultural lien;

      (C) a consignor;

      (D) a person to which accounts, chattel paper, payment intangibles,
or promissory notes have been sold;

      (E) a trustee, indenture trustee, agent, collateral agent, or other rep-
resentative in whose favor a security interest or agricultural lien is created
or provided for; or

      (F) a person that holds a security interest arising under K.S.A. 84-2-
401, 84-2-505, subsection (3) of 84-2-711(3), subsection (5) of 84-2a-
508(5), 84-4-210 and 84-5-118 and amendments thereto.

      (73) (72) ``Security agreement'' means an agreement that creates or
provides for a security interest.

      (74) (73) ``Send,'' in connection with a record or notification, means:

      (A) To deposit in the mail, deliver for transmission, or transmit by
any other usual means of communication, with postage or cost of trans-
mission provided for, addressed to any address reasonable under the cir-
cumstances; or

      (B) to cause the record or notification to be received within the time
that it would have been received if properly sent under subparagraph (A).

      (75) (74) ``Software'' means a computer program and any supporting
information provided in connection with a transaction relating to the pro-
gram. The term does not include a computer program that is included in
the definition of goods.

      (76) (75) ``State'' means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any territory
or insular possession subject to the jurisdiction of the United States.

      (77) (76) ``Statutory lien'' means liens created by K.S.A. 2-1319, 2-
2608, 2-3007, 34-239, 47-836, 58-201, 58-203, 58-204, 58-207, 58-218,
58-220, 58-221, 58-241, 58-242, 58-2524, 58-2525, 58-2526, 58-2527, 58-
2528 and 84-7-209, and amendments thereto.

      (78) (77) ``Supporting obligation'' means a letter-of-credit right or
secondary obligation that supports the payment or performance of an
account, chattel paper, a document, a general intangible, an instrument,
or investment property.

      (79) (78) ``Tangible chattel paper'' means chattel paper evidenced by
a record or records consisting of information that is inscribed on a tangible
medium.

      (80) (79) ``Termination statement'' means an amendment of a fi-
nancing statement which:

      (A) Identifies, by its file number, the initial financing statement to
which it relates; and

      (B) indicates either that it is a termination statement or that the iden-
tified financing statement is no longer effective.

      (81) (80) ``Transmitting utility'' means a person primarily engaged in
the business of:

      (A) Operating a railroad, subway, street railway, or trolley bus;

      (B) transmitting communications electrically, electromagnetically, or
by light;

      (C) transmitting goods by pipeline or sewer; or

      (D) transmitting or producing and transmitting electricity, steam, gas,
or water.

      (b) Definitions in other articles. The following definitions in other
articles apply to this article:

``Applicant''	K.S.A.84-5-102
``Beneficiary''	K.S.A.84-5-102
``Broker''	K.S.A.84-8-102
``Certificated security''	K.S.A.84-8-102
``Check''	K.S.A.84-3-104
``Clearing corporation''	K.S.A.84-8-102
``Contract for sale''	K.S.A.84-2-106
``Customer''	K.S.A.84-4-104
``Entitlement holder''	K.S.A.84-8-102
``Financial asset''	K.S.A.84-8-102
``Holder in due course''	K.S.A.84-3-302
``Issuer'' (with respect to a letter of credit or letter-of-credit right)	K.S.A.84-5-102
``Issuer'' (with respect to a security)	K.S.A.84-8-102
``Lease''	K.S.A.84-2a-103
``Lease agreement''	K.S.A.84-2a-103
``Lease contract''	K.S.A.84-2a-103
``Leasehold interest''	K.S.A.84-2a-103
``Lessee''	K.S.A.84-2a-103
``Lessee in ordinary course of business''	K.S.A.84-2a-103
``Lessor''	K.S.A.84-2a-103
``Lessor's residual interest''	K.S.A.84-2a-103
``Letter of credit''	K.S.A.84-5-102
``Merchant''	K.S.A.84-2-104
``Negotiable instrument''	K.S.A.84-3-104
``Nominated person''	K.S.A.84-5-102
``Note''	K.S.A.84-3-104
``Proceeds of a letter of credit''	K.S.A.84-5-114
``Prove''	K.S.A.84-3-103
``Sale''	K.S.A.84-2-106
``Securities account''	K.S.A.84-8-501
``Securities intermediary''	K.S.A.84-8-102
``Security''	K.S.A.84-8-102
``Security certificate''	K.S.A.84-8-102
``Security entitlement''	K.S.A.84-8-102
``Uncertificated security''	K.S.A.84-8-102

      (c) Article 1 definitions and principles. Article 1 contains general
definitions and principles of construction and interpretation applicable
throughout this article.

      Sec.  8. K.S.A. 2001 Supp. 84-9-104 is hereby amended to read as
follows: 84-9-104. Requirements for control. (a) A secured party has
control of a deposit account if:

      (1) The secured party is the bank with which the deposit account is
maintained;

      (2) the debtor, secured party, and bank have agreed in an authenti-
cated record that the bank will comply with instructions originated by the
secured party directing disposition of the funds in the deposit account
without further consent by the debtor; or

      (3) the secured party becomes the bank's customer with respect to
the deposit account.

      (b) Debtor's right to direct disposition. A secured party that has
satisfied subsection (a) has control, even if the debtor retains the right to
direct the disposition of funds from the deposit account.

      Sec.  9. K.S.A. 2001 Supp. 84-9-109 is hereby amended to read as
follows: 84-9-109. (a) General scope of article. Except as otherwise
provided in subsections (c) and (d), this article applies to:

      (1) A transaction, regardless of its form, that creates a security interest
in personal property or fixtures by contract;

      (2) an agricultural lien;

      (3) a sale of accounts, chattel paper, payment intangibles, or prom-
issory notes;

      (4) a consignment;

      (5) a security interest arising under K.S.A. 84-2-401, 84-2-505, sub-
section (3) of 84-2-711(3) or subsection (5) of 84-2a-508(5) and amend-
ments thereto, as provided in K.S.A. 2001 Supp. 84-9-110 and amend-
ments thereto; and

      (6) a security interest arising under K.S.A. 84-4-201 or 84-5-118 and
amendments thereto.

      (b) Security interest in secured obligation. The application of this
article to a security interest in a secured obligation is not affected by the
fact that the obligation is itself secured by a transaction or interest to
which this article does not apply.

      (c) Extent to which article does not apply. This article does not
apply to the extent that:

      (1) A statute, regulation, or treaty of the United States preempts this
article;

      (2) another statute of this state expressly governs the creation, per-
fection, priority, or enforcement of a security interest created by this state
or a governmental unit of this state;

      (3) a statute of another state, a foreign country, or a governmental
unit of another state or a foreign country, other than a statute generally
applicable to security interests, expressly governs creation, perfection,
priority, or enforcement of a security interest created by the state, coun-
try, or governmental unit; or

      (4) the rights of a transferee beneficiary or nominated person under
a letter of credit are independent and superior under K.S.A. 84-5-114
and amendments thereto.

      (d) Inapplicability of article. This article does not apply to:

      (1) A landlord's lien, other than an agricultural lien;

      (2) a statutory lien, or a lien given by statute or other rule of law for
services or materials, but K.S.A. 2001 Supp. 84-9-333 and amendments
thereto applies with respect to priority of the lien;

      (3) an assignment of a claim for wages, salary, or other compensation
of an employee;

      (4) a sale of accounts, chattel paper, payment intangibles, or prom-
issory notes as part of a sale of the business out of which they arose;

      (5) an assignment of accounts, chattel paper, payment intangibles, or
promissory notes which is for the purpose of collection only;

      (6) an assignment of a right to payment under a contract to an as-
signee that is also obligated to perform under the contract;

      (7) an assignment of a single account, payment intangible, or prom-
issory note to an assignee in full or partial satisfaction of a preexisting
indebtedness;

      (8) a transfer of an interest in or an assignment of a claim under a
policy of insurance, other than an assignment by or to a health-care pro-
vider of a health-care-insurance receivable and any subsequent assign-
ment of the right to payment, but K.S.A. 2001 Supp. 84-9-315 and 84-9-
322 and amendments thereto apply with respect to proceeds and
priorities in proceeds;

      (9) an assignment of a right represented by a judgment, other than a
judgment taken on a right to payment that was collateral;

      (10) a right of recoupment or set-off, but:

      (A) K.S.A. 2001 Supp. 84-9-340 and amendments thereto applies
with respect to the effectiveness of rights of recoupment or set-off against
deposit accounts; and

      (B) K.S.A. 2001 Supp. 84-9-404 and amendments thereto applies
with respect to defenses or claims of an account debtor;

      (11) the creation or transfer of an interest in or lien on real property,
including a lease or rents thereunder, except to the extent that provision
is made for:

      (A) Liens on real property in K.S.A. 2001 Supp. 84-9-203 and 84-9-
308 and amendments thereto;

      (B) fixtures in K.S.A. 2001 Supp. 84-9-334 and amendments thereto;

      (C) fixture filings in K.S.A. 2001 Supp. 84-9-501, 84-9-502, 84-9-512,
84-9-516 and 84-9-519 and amendments thereto; and

      (D) security agreements covering personal and real property in
K.S.A. 2001 Supp. 84-9-604 and amendments thereto;

      (12) an assignment of a claim arising in tort, other than a commercial
tort claim, but K.S.A. 2001 Supp. 84-9-315 and 84-9-322 and amend-
ments thereto apply with respect to proceeds and priorities in proceeds;

      (13) an assignment of a deposit account in a consumer transaction,
but K.S.A. 2001 Supp. 84-9-315 and 84-9-322 and amendments thereto
apply with respect to proceeds and priorities in proceeds; or

      (14) an assignment of rights in or under:

      (A) A claim or right to receive benefits under any workers compen-
sation, industrial accident or similar statute or regulation which provides
benefits for occupational injury or illness; or

      (B) a deferred payment or benefit arrangement that enables a par-
ticipant to exclude or defer recognition of income for purposes of federal
or state income taxation.; or

      (15) a transfer by a government or governmental agency or subdivi-
sion.

      Sec.  10. K.S.A. 2001 Supp. 84-9-306 is hereby amended to read as
follows: 84-9-306. (a) Governing law: issuers issuer's or nominated
person's jurisdiction. Subject to subsection (c), the local law of the
issuer's jurisdiction or a nominated person's jurisdiction governs perfec-
tion, the effect of perfection or nonperfection, and the priority of a se-
curity interest in a letter-of-credit right if the issuer's jurisdiction or nom-
inated person's jurisdiction is a state.

      (b) Issuer's or nominated person's jurisdiction. For purposes of
this part, an issuer's jurisdiction or nominated person's jurisdiction is the
jurisdiction whose law governs the liability of the issuer or nominated
person with respect to the letter-of-credit right as provided in K.S.A. 84-
5-116 and amendments thereto.

      (c) When section not applicable. This section does not apply to a
security interest that is perfected only under K.S.A. 2001 Supp. 84-9-
308(d) and amendments thereto.

      Sec.  11. K.S.A. 2001 Supp. 84-9-311 is hereby amended to read as
follows: 84-9-311. (a) Security interest subject to other law. Except
as otherwise provided in subsection (d), the filing of a financing statement
is not necessary or effective to perfect a security interest in property
subject to:

      (1) A statute, regulation, or treaty of the United States whose require-
ments for a security interest's obtaining priority over the rights of a lien
creditor with respect to the property preempt K.S.A. 2001 Supp. 84-9-
310(a) and amendments thereto;

      (2) any certificate-of-title law of this state covering automobiles, trail-
ers, mobile homes, boats, farm tractors, or the like, which provides for a
security interest to be indicated on the certificate as a condition or result
of perfection; or

      (3) a certificate-of-title statute of another jurisdiction which provides
for a security interest to be indicated on the certificate as a condition or
result of the security interest's obtaining priority over the rights of a lien
creditor with respect to the property.

      (b) Compliance with other law. Compliance with the requirements
of a statute, regulation, or treaty described in subsection (a) for obtaining
priority over the rights of a lien creditor is equivalent to the filing of a
financing statement under this article. Except as otherwise provided in
subsection (d) and K.S.A. 2001 Supp. 84-9-313 and 84-9-316(d) and (e)
and amendments thereto for goods covered by a certificate of title, a
security interest in property subject to a statute, regulation, or treaty
described in subsection (a) may be perfected only by compliance with
those requirements, and a security interest so perfected remains per-
fected notwithstanding a change in the use or transfer of possession of
the collateral.

      (c) Duration and renewal of perfection. Except as otherwise pro-
vided in subsection (d) and K.S.A. 2001 Supp. 84-9-316(d) and (e) and
amendments thereto, duration and renewal of perfection of a security
interest perfected by compliance with the requirements prescribed by a
statute, regulation, or treaty described in subsection (a) are governed by
the statute, regulation, or treaty. In other respects, the security interest
is subject to this article.

      (d) Inapplicability to certain inventory. During any period in
which collateral subject to a statute specified in subsection (a)(2) is inven-
tory held for sale or lease by a person or leased by that person as lessor
and that person is in the business of selling or leasing goods of that kind,
this section does not apply to a security interest in that collateral created
by that person as debtor.

      Sec.  12. K.S.A. 2001 Supp. 84-9-316 is hereby amended to read as
follows: 84-9-316. (a) General rule: effect on perfection of change in
governing law. A security interest perfected pursuant to the law of the
jurisdiction designated in K.S.A. 2001 Supp. 84-9-301(l) or 84-9-305(c)
and amendments thereto remains perfected until the earliest of:

      (1) The time perfection would have ceased under the law of that
jurisdiction;

      (2) the expiration of four months after a change of the debtor's lo-
cation to another jurisdiction; or

      (3) the expiration of one year after a transfer of collateral to a person
that thereby becomes a debtor and is located in another jurisdiction.

      (b) Security interest perfected or unperfected under law of
new jurisdiction. If a security interest described in subsection (a) be-
comes perfected under the law of the other jurisdiction before the earliest
time or event described in that subsection, it remains perfected there-
after. If the security interest does not become perfected under the law
of the other jurisdiction before the earliest time or event, it becomes
unperfected and is deemed never to have been perfected as against a
purchaser of the collateral for value.

      (c) Possessory security interest in collateral moved to new ju-
risdiction. A possessory security interest in collateral, other than goods
covered by a certificate of title and as extracted collateral consisting of
goods, remains continuously perfected if:

      (1) The collateral is located in one jurisdiction and subject to a se-
curity interest perfected under the law of that jurisdiction;

      (2) thereafter the collateral is brought into another jurisdiction; and

      (3) upon entry into the other jurisdiction, the security interest is per-
fected under the law of the other jurisdiction.

      (d) Goods covered by certificate of title from this state. Except
as otherwise provided in subsection (e), a security interest in goods cov-
ered by a certificate of title which is perfected by any method under the
law of another jurisdiction when the goods become covered by a certifi-
cate of title from this state remains perfected until the security interest
would have become unperfected under the law of the other jurisdiction
had the goods not become so covered.

      (e) When subsection (d) security interests interest becomes un-
perfected against purchasers. A security interest described in subsec-
tion (d) becomes unperfected as against a purchaser of the goods for value
and is deemed never to have been perfected as against a purchaser of the
goods for value if the applicable requirements for perfection under K.S.A.
2001 Supp. 84-9-311(b) or 84-9-313 and amendments thereto are not
satisfied before the earlier of:

      (1) The time the security interest would have become unperfected
under the law of the other jurisdiction had the goods not become covered
by a certificate of title from this state; or

      (2) the expiration of four months after the goods had become so cov-
ered.

      (f) Change in jurisdiction of bank, issuer, nominated person,
securities intermediary, or commodity intermediary. A security in-
terest in deposit accounts, letter-of-credit rights, or investment property
which is perfected under the law of the bank's jurisdiction, the issuer's
jurisdiction, a nominated person's jurisdiction, the securities intermedi-
ary's jurisdiction, or the commodity intermediary's jurisdiction, as appli-
cable, remains perfected until the earlier of:

      (1) The time the security interest would have become unperfected
under the law of that jurisdiction; or

      (2) the expiration of four months after a change of the applicable
jurisdiction to another jurisdiction.

      (g) Subsection (f) security interest perfected or unperfected
under law of new jurisdiction. If a security interest described in sub-
section (f) becomes perfected under the law of the other jurisdiction
before the earlier of the time or the end of the period described in that
subsection, it remains perfected thereafter. If the security interest does
not become perfected under the law of the other jurisdiction before the
earlier of that time or the end of that period, it becomes unperfected and
is deemed never to have been perfected as against a purchaser of the
collateral for value.

      Sec.  13. K.S.A. 2001 Supp. 84-9-317 is hereby amended to read as
follows: 84-9-317. (a) Conflicting security interests and rights of lien
creditors. A security interest or agricultural lien is subordinate to the
rights of:

      (1) A person entitled to priority under K.S.A. 2001 Supp. 84-9-322
and amendments thereto; and

      (2) except as otherwise provided in subsection (e), a person that be-
comes a lien creditor before the earlier of the time:

      (A) The security interest or agricultural lien is perfected; or

      (B) on the conditions specified in K.S.A. 2001 Supp. 84-9-203 (b)(3)
and amendments thereto, is met and a financing statement covering the
collateral is filed.

      (b) Buyers that receive delivery. Except as otherwise provided in
subsection (e), a buyer, other than a secured party, of tangible chattel
paper, documents, goods, instruments, or a security certificate takes free
of a security interest or agricultural lien if the buyer gives value and
receives delivery of the collateral without knowledge of the security in-
terest or agricultural lien and before it is perfected.

      (c) Lessees that receive delivery. Except as otherwise provided in
subsection (e), a lessee of goods takes free of a security interest or agri-
cultural lien if the lessee gives value and receives delivery of the collateral
without knowledge of the security interest or agricultural lien and before
it is perfected.

      (d) Licensees and buyers of certain collateral. A licensee of a
general intangible or a buyer, other than a secured party, of accounts,
electronic chattel paper, general intangibles, or investment property other
than a certificated security takes free of a security interest if the licensee
or buyer gives value without knowledge of the security interest and before
it is perfected.

      (e) Purchase-money security interest. Except as otherwise pro-
vided in K.S.A. 2001 Supp. 84-9-320 and 84-9-321 and amendments
thereto, if a person files a financing statement with respect to a purchase-
money security interest before or within 20 days after the debtor receives
delivery of the collateral, the security interest takes priority over the rights
of a buyer, lessee, or lien creditor which arise between the time the
security interest attaches and the time of filing.

      Sec.  14. K.S.A. 2001 Supp. 84-9-331 is hereby amended to read as
follows: 84-9-331. (a) Rights under Articles 3, 7, and 8 not limited.
This article does not limit the rights of a holder in due course of a ne-
gotiable instrument, a holder to which a negotiable document of title has
been duly negotiated, or a protected purchaser of a security. These hold-
ers or purchasers take priority over an earlier security interest, even if
perfected, to the extent provided in articles 3, 7, and 8.

      (b) Protection under Article 8. This article does not limit the rights
of or impose liability on a person to the extent that the person is protected
against the assertion of an adverse a claim under article 8.

      (c) Filing not notice. Filing under this article does not constitute
notice of a claim or defense to the holders, or purchasers, or persons
described in subsections (a) and (b).

      Sec.  15. K.S.A. 2001 Supp. 84-9-334 is hereby amended to read as
follows: 84-9-334. (a) Security interest in fixtures under this article.
A security interest under this article may be created in goods that are
fixtures or may continue in goods that become fixtures. A security interest
does not exist under this article in ordinary building materials incorpo-
rated into an improvement on land.

      (b) Security interest in fixtures under real-property law. This
article does not prevent creation of an encumbrance upon fixtures under
real property law.

      (c) General rule: subordination of security interest in fixtures.
In cases not governed by subsections (d) through (h), 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.

      (d) Fixtures purchase-money priority. Except as otherwise pro-
vided in subsection (h), a perfected security interest in fixtures has priority
over a conflicting interest of an encumbrancer or owner of the real prop-
erty if the debtor has an interest of record in or is in possession of the
real property and:

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

      (2) the interest of the encumbrancer or owner arises before the goods
become fixtures; and

      (3) the security interest is perfected by a fixture filing before the
goods become fixtures or within 20 days thereafter.

      (e) Priority of security interest in fixtures over interests in real
property. A perfected security interest in fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real property if:
(1) The debtor has an interest of record in the real property or is in
possession of the real property and the security interest:

      (A) Is perfected by a fixture filing before the interest of the encum-
brancer or owner is of record; and

      (B) has priority over any conflicting interest of a predecessor in title
of the encumbrancer or owner;

      (2) before the goods become fixtures, the security interest is per-
fected by any method permitted by this article and the fixtures are readily
removable:

      (A) Factory or office machines;

      (B) equipment that is not primarily used or leased for use in the
operation of the real property; or

      (C) replacements of domestic appliances that are consumer goods;

      (3) 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

      (4) the security interest is:

      (A) Created in a manufactured home in a manufactured-home trans-
action; and

      (B) perfected pursuant to a statute described in K.S.A. 2001 Supp.
84-9-311(a)(2) and amendments thereto.

      (f) Priority based on consent, disclaimer, or right to remove. 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:

      (1) The encumbrancer or owner has, in an authenticated record, con-
sented to the security interest or disclaimed an interest in the goods as
fixtures; or

      (2) the debtor has a right to remove the goods as against the encum-
brancer or owner.

      (g) Continuation of subsection (f) paragraph (f)(2) priority. The
priority of the security interest under subsection (f) paragraph (f)(2) con-
tinues for a reasonable time if the debtor's right to remove the goods as
against the encumbrancer or owner terminates.

      (h) Priority of construction mortgage. A mortgage is a construc-
tion 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. Except as
otherwise provided in subsections (e) and (f), 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 construction. 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.

      (i) Priority of security interest in crops. A perfected security in-
terest 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.

      (j) Subsection (i) prevails. Subsection (i) prevails over any incon-
sistent provisions of law of this state.

      Sec.  16. K.S.A. 2001 Supp. 84-9-406 is hereby amended to read as
follows: 84-9-406. (a) Discharge of account debtor; effect of notifi-
cation. Subject to subsections (b) through (i), an account debtor on an
account, chattel paper, or a payment intangible may discharge the account
debtor's obligation by paying the assignor until, but not after, the account
debtor receives a notification, authenticated by the assignor or the as-
signee, that the amount due or to become due has been assigned and that
payment is to be made to the assignee. After receipt of the notification,
the account debtor may discharge the account debtor's obligation by pay-
ing the assignee and may not discharge the obligation by paying the as-
signor.

      (b) When notification ineffective. Subject to subsection (h), noti-
fication is ineffective under subsection (a):

      (1) If it does not reasonably identify the rights assigned;

      (2) to the extent that an agreement between an account debtor and
a seller of a payment intangible limits the account debtor's duty to pay a
person other than the seller and the limitation is effective under law other
than this article; or

      (3) at the option of an account debtor, if the notification notifies the
account debtor to make less than the full amount of any installment or
other periodic payment to the assignee, even if:

      (A) Only a portion of the account, chattel paper, or general payment
intangible has been assigned to that assignee;

      (B) a portion has been assigned to another assignee; or

      (C) the account debtor knows that the assignment to that assignee is
limited.

      (c) Proof of assignment. Subject to subsection (h), if requested by
the account debtor, an assignee shall seasonably furnish reasonable proof
that the assignment has been made. Unless the assignee complies, the
account debtor may discharge its obligation by paying the assignor, even
if the account debtor has received a notification under subsection (a).

      (d) Term restricting assignment generally ineffective. Except as
otherwise provided in subsection (e), K.S.A. 84-2a-303 and K.S.A. 2001
Supp. 84-9-407, and amendments thereto, and subject to subsection (h),
a term in an agreement between an account debtor and an assignor or in
a promissory note is ineffective to the extent that it:

      (1) Prohibits, restricts, or requires the consent of the account debtor
or person obligated on the promissory note to the assignment or transfer
of, or the creation, attachment, perfection, or enforcement of a security
interest in, the account, chattel paper, payment intangible, or promissory
note; or

      (2) provides that the assignment or transfer or the creation, attach-
ment, perfection, or enforcement of the security interest may give rise to
a default, breach, right of recoupment, claim, defense, termination, right
of termination, or remedy under the account, chattel paper, payment
intangible, or promissory note.

      (e) Inapplicability of subsection (d) to certain sales. Subsection
(d) does not apply to the sale of a payment intangible or promissory note.

      (f) Legal restrictions on assignment generally ineffective. Ex-
cept as otherwise provided in K.S.A. 84-2a-303 and K.S.A. 2001 Supp.
84-9-407 and amendments thereto, and subject to subsections (h) and (i),
a rule of law, statute, or regulation that prohibits, restricts, or requires
the consent of a government, governmental body or official, or account
debtor to the assignment or transfer of, or creation of a security interest
in, an account or chattel paper is ineffective to the extent that the rule of
law, statute, or regulation:

      (1) Prohibits, restricts, or requires the consent of the government,
governmental body or official, or account debtor to the assignment or
transfer of, or the creation, attachment, perfection, or enforcement of a
security interest in the account or chattel paper; or

      (2) provides that the assignment or transfer or the creation, attach-
ment, perfection, or enforcement of the security interest may give rise to
a default, breach, right of recoupment, claim, defense, termination, right
of termination, or remedy under the account or chattel paper.

      (g) Subsection (b)(3) not waivable. Subject to subsection (h), an
account debtor may not waive or vary its option under subsection (b)(3).

      (h) Rule for individual under other law. This section is subject to
law other than this article which establishes a different rule for an account
debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.

      (i) Inapplicability to health-care-insurance receivable. This sec-
tion does not apply to an assignment of a health-care-insurance receiva-
ble.

      (j) Section prevails over specified inconsistent law. This section
prevails over any inconsistent provisions of any laws, rules, and regula-
tions.

      Sec.  17. K.S.A. 2001 Supp. 84-9-509 is hereby amended to read as
follows: 84-9-509. (a) Person entitled to file record. A person may file
an initial financing statement, amendment that adds collateral covered by
a financing statement, or amendment that adds a debtor to a financing
statement only if:

      (1) The debtor authorizes the filing in an authenticated record pur-
suant to subsection (b) or (c); or

      (2) the person holds an agricultural lien that has become effective at
the time of filing and the financing statement covers only collateral in
which the person holds an agricultural lien.

      (b) Security agreement as authorization. By authenticating or be-
coming bound as debtor by a security agreement, a debtor or new debtor
authorizes the filing of an initial financing statement, and an amendment,
covering:

      (1) The collateral described in the security agreement; and

      (2) property that becomes collateral under K.S.A. 2001 Supp. 84-9-
315(a)(2) and amendments thereto, whether or not the security agree-
ment expressly covers proceeds.

      (c) Acquisition of collateral as authorization. By acquiring collat-
eral in which a security interest or agricultural lien continues under K.S.A.
2001 Supp. 84-9-315(a)(1) and amendments thereto, a debtor authorizes
the filing of an initial financing statement, and an amendment, covering
the collateral and property that becomes collateral under K.S.A. 2001
Supp. 84-9-315(a)(2) and amendments thereto.

      (d) Person entitled to file certain amendments. A person may
file an amendment other than an amendment that adds collateral covered
by a financing statement or an amendment that adds a debtor to a fi-
nancing statement only if:

      (1) The secured party of record authorizes the filing; or

      (2) the amendment is a termination statement for a financing state-
ment as to which the secured party of record has failed to file or send a
termination statement as required by K.S.A. 2001 Supp. 84-9-513(a) or
(c) and amendments thereto, the debtor authorizes the filing, and the
termination statement indicates that the debtor authorized it to be filed.

      (e) Multiple secured parties of record. If there is more than one
secured party of record for a financing statement, each secured party of
record may authorize the filing of an amendment under subsection (d).

      Sec.  18. K.S.A. 2001 Supp. 84-9-513 is hereby amended to read as
follows: 84-9-513. (a) Consumer goods. A secured party shall cause the
secured party of record for a financing statement to file a termination
statement for the financing statement if the financing statement covers
consumer goods and:

      (1) There is no obligation secured by the collateral covered by the
financing statement and no commitment to make an advance, incur an
obligation, or otherwise give value; or

      (2) the debtor did not authorize the filing of the initial financing state-
ment.

      (b) Time for compliance with subsection (a). To comply with sub-
section (a), a secured party shall cause the secured party of record to file
the termination statement:

      (1) Within one month after there is no obligation secured by the
collateral covered by the financing statement and no commitment to
make an advance, incur an obligation, or otherwise give value; or

      (2) if earlier, within 20 days after the secured party receives an au-
thenticated demand from a debtor.

      (c) Other collateral. In cases not governed by subsection (a), within
20 days after a secured party receives an authenticated demand from a
debtor, the secured party shall cause the secured party of record for a
financing statement to send to the debtor a termination statement for the
financing statement or file the termination statement in the filing office
if:

      (1) Except in the case of a financing statement covering accounts or
chattel paper that has been sold or goods that are the subject of a con-
signment, there is no obligation secured by the collateral covered by the
financing statement and no commitment to make an advance, incur an
obligation, or otherwise give value;

      (2) the financing statement covers accounts or chattel paper that has
been sold but as to which the account debtor or other person obligated
has discharged its obligation;

      (3) the financing statement covers goods that were the subject of a
consignment to the debtor but are not in the debtor's possession; or

      (4) the debtor did not authorize the filing of the initial financing state-
ment.

      (d) Effect of filing termination statement. Except as otherwise
provided in K.S.A. 2001 Supp. 84-9-510 and amendments thereto, upon
the filing of a termination statement with the filing office, the financing
statement to which the termination statement relates ceases to be effec-
tive. Except as otherwise provided in K.S.A. 2001 Supp. 84-9-510, and
amendments thereto, for purposes of K.S.A. 2001 Supp. 84-9-519(g),
K.S.A. 2001 Supp. 84-9-522(a), and K.S.A. 2001 Supp. 84-9-523(c), and
amendments thereto, the filing with the filing office of a termination state-
ment relating to a financing statement that indicates that the debtor is a
transmitting utility also causes the effectiveness of the financing statement
to lapse.

      Sec.  19. K.S.A. 2001 Supp. 84-9-515 is hereby amended to read as
follows: 84-9-515. (a) Five-year effectiveness. Except as otherwise pro-
vided in subsections (b), (e), (f), and (g), a filed financing statement is
effective for a period of five years after the date of filing.

      (b) Public-finance or Manufactured-home transaction. Except
as otherwise provided in subsections (e), (f), and (g), an initial financing
statement filed in connection with a public-finance transaction or man-
ufactured-home transaction is effective for a period of 30 years after the
date of filing if it indicates that it is filed in connection with a public-
finance transaction or manufactured-home transaction.

      (c) Lapse and continuation of financing statement. The effect-
iveness of a filed financing statement lapses on the expiration of the pe-
riod of its effectiveness unless before the lapse a continuation statement
is filed pursuant to subsection (d). Upon lapse, a financing statement
ceases to be effective and any security interest or agricultural lien that
was perfected by the financing statement becomes unperfected, unless
the security interest is perfected otherwise. If the security interest or
agricultural lien becomes unperfected upon lapse, it is deemed never to
have been perfected as against a purchaser of the collateral for value.

      (d) When continuation statement may be filed. A continuation
statement may be filed only within six months before the expiration of
the five-year period specified in subsection (a) or the thirty-year period
specified in subsection (b), whichever is applicable.

      (e) Effect of filing continuation statement. Except as otherwise
provided in K.S.A. 2001 Supp. 84-9-510 and amendments thereto, upon
timely filing of a continuation statement, the effectiveness of the initial
financing statement continues for a period of five years commencing on
the day on which the financing statement would have become ineffective
in the absence of the filing. Upon the expiration of the five-year period,
the financing statement lapses in the same manner as provided in sub-
section (c), unless, before the lapse, another continuation statement is
filed pursuant to subsection (d). Succeeding continuation statements may
be filed in the same manner to continue the effectiveness of the initial
financing statement.

      (f) Transmitting utility financing statement. If a debtor is a trans-
mitting utility and a filed financing statement so indicates, the financing
statement is effective until a termination statement is filed.

      (g) Record of mortgage as financing statement. A record of a
mortgage that is effective as a financing statement filed as a fixture filing
under subsection (c) of K.S.A. 2001 Supp. 84-9-502(c) and amendments
thereto, remains effective as a financing statement filed as a fixture filing
until the mortgage is released or satisfied of record or its effectiveness
otherwise terminates as to the real property.

      Sec.  20. K.S.A. 2001 Supp. 84-9-525 is hereby amended to read as
follows: 84-9-525. (a) Initial financing statement or other record:
general rule. The fee for filing and indexing a record under this part
shall be provided by the secretary of state.

      Sec.  21. K.S.A. 2001 Supp. 84-9-608 is hereby amended to read as
follows: 84-9-608. (a) Application of proceeds, surplus, and defi-
ciency if obligation secured. If a security interest or agricultural lien
secures payment or performance of an obligation, the following rules
apply:

      (1) A secured party shall apply or pay over for application the cash
proceeds of collection or enforcement under this section K.S.A. 2001
Supp. 84-9-607, and amendments thereto, in the following order to:

      (A) The reasonable expenses of collection and enforcement and, to
the extent provided for by agreement and not prohibited by law, reason-
able attorney fees and legal expenses incurred by the secured party;

      (B) the satisfaction of obligations secured by the security interest or
agricultural lien under which the collection or enforcement is made; and

      (C) the satisfaction of obligations secured by any subordinate security
interest in or other lien on the collateral subject to the security interest
or agricultural lien under which the collection or enforcement is made if
the secured party receives an authenticated demand for proceeds before
distribution of the proceeds is completed.

      (2) If requested by a secured party, a holder of a subordinate security
interest or other lien shall furnish reasonable proof of the interest or lien
within a reasonable time. Unless the holder complies, the secured party
need not comply with the holder's demand under paragraph (1)(C).

      (3) A secured party need not apply or pay over for application non-
cash proceeds of collection and enforcement under this section K.S.A.
2001 Supp. 84-9-607, and amendments thereto, unless the failure to do
so would be commercially unreasonable. A secured party that applies or
pays over for application noncash proceeds shall do so in a commercially
reasonable manner.

      (4) A secured party shall account to and pay a debtor for any surplus,
and the obligor is liable for any deficiency.

      (b) No surplus or deficiency in sales of certain rights to pay-
ment. If the underlying transaction is a sale of accounts, chattel paper,
payment intangibles, or promissory notes, the debtor is not entitled to
any surplus, and the obligor is not liable for any deficiency.

      Sec.  22. K.S.A. 2001 Supp. 84-9-613 is hereby amended to read as
follows: 84-9-613. Except in a consumer-goods transaction, the following
rules apply:

      (1) The contents of a notification of disposition are sufficient if the
notification:

      (A) Describes the debtor and the secured party;

      (B) describes the collateral that is the subject of the intended dis-
position;

      (C) states the method of intended disposition;

      (D) states that the debtor is entitled to an accounting of the unpaid
indebtedness and states the charge, if any, for an accounting; and

      (E) states the time and place of a public sale disposition or the time
after which any other disposition is to be made.

      (2) Whether the contents of a notification that lacks any of the infor-
mation specified in paragraph (1) are nevertheless sufficient is a question
of fact.

      (3) The contents of a notification providing substantially the infor-
mation specified in paragraph (1) are sufficient, even if the notification
includes:

      (A) Information not specified by that paragraph; or

      (B) minor errors that are not seriously misleading.

      (4) A particular phrasing of the notification is not required.

      (5) The following form of notification and the form appearing in
K.S.A. 2001 Supp. 84-9-614(3) and amendments thereto, when com-
pleted, each provides sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL       To:

Name of debtor, obligor, or other person to which

the notification is sent

      From:

Name, address, and telephone number of secured

party

      Name of Debtor(s):

Include only if debtor(s) are not an addressee

      For a public disposition:

      We will sell [or lease or license, as applicable] the describe collateral
[to the highest qualified bidder] in public as follows:

      Day and Date:

      Time:

      Place:

      For a private disposition:

      We will sell [or lease or license, as applicable] the describe collateral
privately sometime after; [day and date].

      You are entitled to an accounting of the unpaid indebtedness secured
by the property that we intend to sell [or lease or license, as applicable]
[for a charge of $________]. You may request an accounting by calling
us at[telephone number].

      Sec.  23. K.S.A. 2001 Supp. 84-9-615 is hereby amended to read as
follows: 84-9-615. (a) Application of proceeds. A secured party shall
apply or pay over for application the cash proceeds of disposition under
K.S.A. 2001 Supp. 84-9-610, and amendments thereto, in the following
order to:

      (1) The reasonable expenses of retaking, holding, preparing for dis-
position, processing, and disposing, and, to the extent provided for by
agreement and not prohibited by law, reasonable attorney fees and legal
expenses incurred by the secured party;

      (2) the satisfaction of obligations secured by the security interest or
agricultural lien under which the disposition is made;

      (3) the satisfaction of obligations secured by any subordinate security
interest in or other subordinate lien on the collateral if:

      (A) The secured party receives from the holder of the subordinate
security interest or other lien an authenticated demand for proceeds be-
fore distribution of the proceeds is completed; and

      (B) in a case in which a consignor has an interest in the collateral,
the subordinate security interest or other lien is senior to the interest of
the consignor; and

      (4) a secured party that is a consignor of the collateral if the secured
party receives from the consignor an authenticated demand for proceeds
before distribution of the proceeds is completed.

      (b) Proof of subordinate interest. If requested by a secured party,
a holder of a subordinate security interest or other lien shall furnish rea-
sonable proof of the interest or lien within a reasonable time. Unless the
holder does so, the secured party need not comply with the holder's
demand under subsection (a)(3).

      (c) Application of noncash proceeds. A secured party need not
apply or pay over for application noncash proceeds of disposition under
this section K.S.A. 2001 Supp. 84-9-610, and amendments thereto, unless
the failure to do so would be commercially unreasonable. A secured party
that applies or pays over for application noncash proceeds shall do so in
a commercially reasonable manner.

      (d) Surplus or deficiency if obligation secured. If the security
interest under which a disposition is made secures payment or perform-
ance of an obligation, after making the payments and applications re-
quired by subsection (a) and permitted by subsection (c):

      (1) Unless subsection (a)(4) requires the secured party to apply or
pay over cash proceeds to a consignor, the secured party shall account to
and pay a debtor for any surplus; and

      (2) the obligor is liable for any deficiency.

      (e) No surplus or deficiency in sales of certain rights to pay-
ment. If the underlying transaction is a sale of accounts, chattel paper,
payment intangibles, or promissory notes:

      (1) The debtor is not entitled to any surplus; and

      (2) the obligor is not liable for any deficiency.

      (f) Calculation of surplus or deficiency in disposition to person
related to secured party. The surplus or deficiency following a dispo-
sition is calculated based on the amount of proceeds that would have
been realized in a disposition complying with this part to a transferee
other than the secured party, a person related to the secured party, or a
secondary obligor if:

      (1) The transferee in the disposition is the secured party, a person
related to the secured party, or a secondary obligor; and

      (2) the amount of proceeds of the disposition is significantly below
the range of proceeds that a complying disposition to a person other than
the secured party, a person related to the secured party, or a secondary
obligor would have brought.

      (g) Cash proceeds received by junior secured party. A secured
party that receives cash proceeds of a disposition in good faith and without
knowledge that the receipt violates the rights of the holder of a security
interest or other lien that is not subordinate to the security interest or
agricultural lien under which the disposition is made:

      (1) Takes the cash proceeds free of the security interest or other lien;

      (2) is not obligated to apply the proceeds of the disposition to the
satisfaction of obligations secured by the security interest or other lien;
and

      (3) is not obligated to account to or pay the holder of the security
interest or other lien for any surplus.

      Sec.  24. K.S.A. 2001 Supp. 84-9-625 is hereby amended to read as
follows: 84-9-625. (a) Judicial orders concerning noncompliance. If
it is established that a secured party is not proceeding in accordance with
this article, a court may order or restrain collection, enforcement, or dis-
position of collateral on appropriate terms and conditions.

      (b) Damages for noncompliance. Subject to subsections (c), (d),
and (f), a person is liable for damages in the amount of any loss caused
by a failure to comply with this article. Loss caused by a failure to comply
with a request under K.S.A. 2001 Supp. 84-9-210 and amendments
thereto may include loss resulting from the debtor's inability to obtain,
or increased costs of, alternative financing.

      (c) Persons entitled to recover damages; statutory damages in
consumer-goods transaction. Except as otherwise provided in K.S.A.
2001 Supp. 84-9-628 and amendments thereto:

      (1) A person that, at the time of the failure, was a debtor, was an
obligor, or held a security interest in or other lien on the collateral may
recover damages under subsection (b) for its loss; and

      (2) if the collateral is consumer goods, a person that was a debtor or
a secondary obligor at the time a secured party failed to comply with this
part may recover for that failure in any event an amount not less than the
credit service charge plus 10 percent of the principal amount of the ob-
ligation or the time-price differential plus 10 percent of the cash price.

      (d) Recovery when deficiency eliminated or reduced. A debtor
whose deficiency is eliminated under K.S.A. 2001 Supp. 84-9-626 and
amendments thereto may recover damages for the loss of any surplus.
However, a debtor or secondary obligor whose deficiency is eliminated
or reduced under K.S.A. 2001 Supp. 84-9-626 and amendments thereto
may not otherwise recover under subsection (b) for noncompliance with
the provisions of this part relating to collection, enforcement, disposition,
or acceptance.

      (e) Statutory damages: noncompliance with specified provi-
sions. In addition to any damages recoverable under subsection (b), the
debtor, consumer obligor, or person named as a debtor in a filed record,
as applicable, may recover $500 in each case from a person that:

      (1) Fails to comply with K.S.A. 2001 Supp. 84-9-208 and amend-
ments thereto;

      (2) fails to comply with K.S.A. 2001 Supp. 84-9-209 and amendments
thereto;

      (3) files a record that the person is not entitled to file under K.S.A.
2001 Supp. 84-9-509(a) and amendments thereto;

      (4) fails to cause the secured party of record to file or send a termi-
nation statement as required by K.S.A. 2001 Supp. 84-9-513(a) or (c) and
amendments thereto;

      (5) fails to comply with K.S.A. 2001 Supp. 84-9-616(b)(1) and amend-
ments thereto, and whose failure is part of a pattern, or consistent with
a practice, of noncompliance; or

      (6) fails to comply with K.S.A. 2001 Supp. 84-9-616(b)(2) and amend-
ments thereto.

      (f) Statutory damages: noncompliance with K.S.A. 2001 Supp.
84-9-210 and amendments thereto. A debtor or consumer obligor may
recover damages under subsection (b) and, in addition, $500 in each case
from a person that, without reasonable cause, fails to comply with a re-
quest under K.S.A. 2001 Supp. 84-9-210 and amendments thereto. A
recipient of a request under K.S.A. 2001 Supp. 84-9-210 and amendments
thereto which never claimed an interest in the collateral or obligations
that are the subject of a request under that section has a reasonable excuse
for failure to comply with the request within the meaning of this subsec-
tion.

      (g) Limitation of security interest: noncompliance with K.S.A.
2001 Supp. 84-9-210 and amendments thereto. If a secured party
fails to comply with a request regarding a list of collateral or a statement
of account under K.S.A. 2001 Supp. 84-9-210 and amendments thereto,
the secured party may claim a security interest only as shown in the list
or statement included in the request as against a person that is reasonably
misled by the failure.

      Sec.  25. K.S.A. 2001 Supp. 84-9-628 is hereby amended to read as
follows: 84-9-628. (a) Limitation of liability to debtor or obligor of se-
cured party for noncompliance with article. Unless a secured party knows
that a person is a debtor or obligor, knows the identity of the person, and
knows how to communicate with the person:

      (1) 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

      (2) the secured party's failure to comply with this article does not
affect the liability of the person for a deficiency.

      (b) Limitation of liability to debtor, obligor, another secured party,
or lienholder based on status as secured party. A secured party is not
liable because of its status as secured party:

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

      (A) That the person is a debtor or obligor;

      (B) the identity of the person; and

      (C) how to communicate with the person; or

      (2) to a secured party or lienholder that has filed a financing state-
ment against a person, unless the secured party knows:

      (A) That the person is a debtor; and

      (B) the identity of the person.

      (c) Limitation of liability if reasonable belief that transaction
not a consumer-goods transaction or consumer transaction. A se-
cured party is not liable to any person, and a person's liability for a de-
ficiency 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 con-
sumer goods, if the secured party's belief is based on its reasonable reli-
ance on:

      (1) A debtor's representation concerning the purpose for which col-
lateral was to be used, acquired, or held; or

      (2) an obligor's representation concerning the purpose for which a
secured obligation was incurred.

      (d) Limitation of liability for statutory damages. A secured party
is not liable to any person under K.S.A. 2001 Supp. 84-9-625(c)(2) and
amendments thereto, for its failure to comply with K.S.A. 2001 Supp. 84-
9-616 and amendments thereto.

      (e) Limitation of multiple liability for statutory damages. A se-
cured party is not liable under K.S.A. 2001 Supp. 84-9-625(c)(2) and
amendments thereto, more than once with respect to any one secured
obligation.

      Sec.  26. K.S.A. 2001 Supp. 84-9-702 is hereby amended to read as
follows: 84-9-702. (a) Pre-effective date transactions or liens. Except
as otherwise provided in this part, this act applies to a transaction or lien
within its scope, even if the transaction or lien was entered into or created
before this act takes effect.

      (b) Continuing validity. Except as otherwise provided in subsection
(c) and K.S.A. 2001 Supp. 84-9-304 and 84-9-703 through 84-9-709 and
amendments thereto:

      (1) Transactions and liens that were not governed by former article
9, were validly entered into or created before this act takes effect, and
would be subject to this act if they had been entered into or created after
this act takes effect, and the rights, duties, and interests flowing from
those transactions and liens remain valid after this act takes effect; and

      (2) the transactions and liens may be terminated, completed, con-
summated, and enforced as required or permitted by this act or by the
law that otherwise would apply if this act had not taken effect.

      (c) Pre-effective date proceedings. This act does not affect an ac-
tion, case, or proceeding commenced before this act takes effect.

      Sec.  27. K.S.A. 2001 Supp. 84-9-705 is hereby amended to read as
follows: 84-9-705. (a) Pre-effective date action; one-year perfection
period unless reperfected. If action, other than the filing of a financing
statement, is taken before this act takes effect and the action would have
resulted in priority of a security interest over the rights of a person that
becomes a lien creditor had the security interest become enforceable
before this act takes effect, the action is effective to perfect a security
interest that attaches under this act within one year after this act takes
effect. An attached security interest becomes unperfected one year after
this act takes effect unless the security interest becomes a perfected se-
curity interest under this act before the expiration of that period.

      (b) Pre-effective date filing. The filing of a financing statement
before this act takes effect is effective to perfect a security interest to the
extent the filing would satisfy the applicable requirements for perfection
under this act.

      (c) Pre-effective date filing in jurisdiction formerly governing
perfection. This act does not render ineffective an effective financing
statement that, before this act takes effect, is filed and satisfies the ap-
plicable requirements for perfection under the law of the jurisdiction
governing perfection as provided in K.S.A. 84-9-103 prior to the effective
date of this act. However, except as otherwise provided in subsections (d)
and (e) and K.S.A. 2001 Supp. 84-9-706 and amendments thereto, the
financing statement ceases to be effective at the earlier of:

      (1) The time the financing statement would have ceased to be effec-
tive under the law of the jurisdiction in which it is filed; or

      (2) June 30, 2006.

      (d) Continuation statement. The filing of a continuation statement
after this act takes effect does not continue the effectiveness of the fi-
nancing statement filed before this act takes effect. However, upon the
timely filing of a continuation statement after this act takes effect and in
accordance with the law of the jurisdiction governing perfection as pro-
vided in part 3, the effectiveness of a financing statement filed in the
same office in that jurisdiction before this act takes effect continues for
the period provided by the law of that jurisdiction.

      (e) Application of subsection (c)(2) to transmitting utility fi-
nancing statement. Subsection (c)(2) applies to a financing statement
that, before this act takes effect, is filed against a transmitting utility and
satisfies the applicable requirements for perfection under the law of the
jurisdiction governing perfection as provided in K.S.A. 84-9-103 prior to
the effective date of this act only to the extent that part 3 provides that
the law of a jurisdiction other than the jurisdiction in which the financing
statement is filed governs perfection of a security interest in collateral
covered by the financing statement.

      (f) Application of Part 5. A financing statement that includes a fi-
nancing statement filed before this act takes effect and a continuation
statement filed after this act takes effect is effective only to the extent
that it satisfies the requirements of part 5 for an initial financing state-
ment.

      New Sec.  28. (a) Pre-effective-date financing statement. In this
section, ``pre-effective-date financing statement'' means a financing state-
ment filed before this act takes effect.

      (b) Applicable law. After this act takes effect, a person may add or
delete collateral covered by, continue or terminate the effectiveness of,
or otherwise amend the information provided in, a pre-effective-date fi-
nancing statement only in accordance with the law of the jurisdiction
governing perfection as provided in part 3. However, the effectiveness of
a pre-effective-date financing statement also may be terminated in ac-
cordance with the law of the jurisdiction in which the financing statement
is filed.

      (c) Method of amending: general rule. Except as otherwise pro-
vided in subsection (d), if the law of this state governs perfection of a
security interest, the information in a pre-effective-date financing state-
ment may be amended after this act takes effect only if:

      (1) The pre-effective-date financing statement and an amendment
are filed in the office specified in K.S.A. 2001 Supp. 84-9-501, and amend-
ments thereto;

      (2) an amendment is filed in the office specified in K.S.A. 2001 Supp.
84-9-501, and amendments thereto, concurrently with, or after the filing
in that office of, an initial financing statement that satisfies K.S.A. 2001
Supp. 84-9-706(c), and amendments thereto; or

      (3) an initial financing statement that provides the information as
amended and satisfies K.S.A. 2001 Supp. 84-9-706(c), and amendments
thereto, is filed in the office specified in K.S.A. 2001 Supp. 84-9-501, and
amendments thereto.

      (d) Method of amending: continuation. If the law of this state
governs perfection of a security interest, the effectiveness of a pre-effec-
tive-date financing statement may be continued only under K.S.A. 2001
Supp. 84-9-705(d) and (f), and amendments thereto.

      (e) Method of amending: additional termination rule. Whether
or not the law of this state governs perfection of a security interest, the
effectiveness of a pre-effective-date financing statement filed in this state
may be terminated after this act takes effect by filing a termination state-
ment in the office in which the pre-effective-date financing statement is
filed, unless an initial financing statement that satisfies K.S.A. 2001 Supp.
84-9-706(c), and amendments thereto, has been filed in the office spec-
ified by the law of the jurisdiction governing perfection as provided in
part 3 as the office in which to file a financing statement.

      Sec.  29. K.S.A. 2001 Supp. 84-1-105 is hereby amended to read as
follows: 84-1-105. (1) Except as provided hereafter in this section, when
a transaction bears a reasonable relation to this state and also to another
state or nation the parties may agree that the law either of this state or
of such other state or nation shall govern their rights and duties. Failing
such agreement this act applies to transactions bearing an appropriate
relation to this state.

      (2) Where one of the following provisions of this act specifies the
applicable law, that provision governs and a contrary agreement is effec-
tive only to the extent permitted by the law (including the conflict of laws
rules) so specified:

      Rights of creditors against sold goods. K.S.A. 84-2-402 and amend-
ments thereto.

      Applicability of the article on leases. K.S.A. 84-2a-105 and 84-2a-106,
and amendments thereto.

      Applicability of the article on bank deposits and collections. K.S.A. 84-
4-102 and amendments thereto.

      Applicability of the article on investment securities. K.S.A. 84-8-110
and amendments thereto.

      Governing law in the article on funds transfers. K.S.A. 84-4a-507 and
amendments thereto.

      Letters of credit. K.S.A. 84-5-116 and amendments thereto.

      Law governing perfection, the effect of perfection or nonperfection,
and the priority of security interests and agricultural liens. K.S.A. 2001
Supp. 84-9-301 through 84-9-307 and amendments thereto.

      Sec.  30. K.S.A. 34-2,101 is hereby amended to read as follows: 34-
2,101. The provisions of this act relating to licensing, bonding and super-
vision of warehouses shall not be construed to apply to any public ware-
houseman who is, or shall hereafter be, duly licensed under the federal
warehouse act, except that the provisions of K.S.A. 34-2,112, and amend-
ments thereto, shall apply to all state and federally licensed warehouses.

      Sec.  31. K.S.A. 34-2,112 is hereby amended to read as follows: 34-
2,112. (a) Whenever any amount of grain is received in any public ware-
house from a producer and is sold by the producer to the public ware-
houseman with, or if a grain producer delivers grain for sale pursuant to
an agreement with the public warehouseman for deferred payment or
deferred pricing, and if upon demand for payment by the producer, the
warehouseman fails to make full payment as due or makes payment by
check, if the check that fails, because of insufficient funds, to clear the
bank or other financial institution on which it is drawn within 10 15 days
after the date the check is issued or the demand is made, excluding Sat-
urdays, Sundays and holidays, the sale of such amount of grain may be
voided by the producer by notifying the public warehouseman in writing
that the sale is void. In any such case, the public warehouseman shall
include such amount of grain in the public warehouseman's daily position
record and other records as an open storage obligation upon receiving
such written notice voiding the sale.

      (b) As used in this section, the words and phrases defined in K.S.A.
34-223 and amendments thereto shall have the meanings ascribed to
them in that statute.

      (c) This section shall be construed as supplemental to the statutes
contained in article 2 of chapter 34 of the Kansas Statutes Annotated and
amendments thereto.

      Sec.  32. K.S.A. 58-204 is hereby amended to read as follows: 58-204.
Any person claiming a lien as aforesaid as provided in K.S.A. 58-203, and
amendments thereto, shall file in the office of the register of deeds of the
county in which said the threshing or harvesting is done, a statement in
writing, duly verified by him or her, setting such person. Such statement
shall set forth the name of the owner or owners of the grain or grain
crops, threshed or harvested, the kind of grain, the number of bushels
threshed or acres harvested, the description of the land upon which said
such grain or grain crop was raised, the contract price for such threshing
or harvesting, or the price or value of such wages, the date of the threshing
or harvesting, the amount due and the name of the claimant.

      Said Such statement shall be filed and entered by the register of deeds
in the same manner and upon the same books as in the case of other
financing statements provided for under the uniform commercial code,
and the said. The register of deeds shall collect from the person presenting
the same statement, a fee equal to the fee for filing financing statements
under the uniform commercial code;. Such statement shall be filed within
fifteen 30 days after the completion of said such threshing or harvesting
or the rendering of such services, and in case said threshing or harvesting
has begun and the work is interrupted for more than five days, such
statement shall be filed within fifteen days after the beginning of such
interruption.

      Sec.  33. K.S.A. 34-2-101, 34-2-112, 58-204, 58-244, 66-1217, 66-
1219, 79-2616 and 79-2617 and K.S.A. 2001 Supp. 17-630, 84-1-105, 84-
9-102, 84-9-104, 84-9-109, 84-9-306, 84-9-311, 84-9-316, 84-9-317, 84-9-
331, 84-9-334, 84-9-406, 84-9-509, 84-9-513, 84-9-515, 84-9-525,
84-9-608, 84-9-613, 84-9-615, 84-9-625, 84-9-628, 84-9-702 and 84-9-705
are hereby repealed.

 Sec.  34. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved May 17, 2002.
 Published in the Kansas Register May 23, 2002.
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