(1) Except as otherwise provided in subsections (3) and (4) of this section, this article applies to:
(a) A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;
(b) An agricultural lien;
(c) A sale of accounts, chattel paper, payment intangibles, or promissory notes;
(d) A consignment;
(e) A security interest arising under KRS 355.2-401, 355.2-505, 355.2-711(3), or 355.2A-508(5), as provided in KRS 355.9-110; and (f) A security interest arising under KRS 355.4-210 or 355.5-118.
(2) 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.
(3) This article does not apply to the extent that:
(a) A statute, regulation, or treaty of the United States preempts this article;
(b) Another statute of this Commonwealth expressly governs the creation, perfection, priority, or enforcement of a security interest created by this Commonwealth or a governmental unit of this Commonwealth;
(c) 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, country, or governmental unit; or (d) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under KRS 355.5-114.
(4) This article does not apply to:
(a) A landlord's lien, other than an agricultural lien;
(b) A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but KRS 355.9-333 applies with respect to priority of the lien;
(c) An assignment of a claim for wages, salary, or other compensation of an employee, or for workers' compensation benefits payable to an individual;
(d) A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;
(e) An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;
(f) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;
(g) An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;
(h) 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 provider of a health- care-insurance receivable and any subsequent assignment of the right to payment, but KRS 355.9-315 and 355.9-322 apply with respect to proceeds and priorities in proceeds;
(i) An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;
(j) A right of recoupment or set-off, but:
1. KRS 355.9-340 applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and 2. KRS 355.9-404 applies with respect to defenses or claims of an account debtor;
(k) 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:
1. Liens on real property in KRS 355.9-203 and 355.9-308;
2. Fixtures in KRS 355.9-334;
3. Fixture filings in KRS 355.9-501, 355.9-502, 355.9-512, 355.9-516, and 355.9-519; and 4. Security agreements covering personal and real property in KRS 355.9- 604;
(l) An assignment of a claim arising in tort, other than a commercial tort claim, but KRS 355.9-315 and 355.9-322 apply with respect to proceeds and priorities in proceeds;
(m) An assignment of a deposit account in a consumer transaction, but KRS 355.9-315 and 355.9-322 apply with respect to proceeds and priorities in proceeds;
(n) A claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. sec. 104(a)(1) or (2), as amended from time to time;
(o) A claim or right to receive benefits under a special needs trust as described in 42 U.S.C. sec. 1396p(d)(4), as amended from time to time;
(p) A right to receive money under a structured settlement as defined by KRS 454.430; or (q) A public-finance transaction or a transfer by a government or governmental unit.