Control Agreement For Collateral Accounts

Generally speaking, a lender who perfects an interest in the security of a deposit by “control” must: mortgage deposit control agreements exist in all forms and sizes, and it is necessary to have a fundamental understanding of what you need to pay attention to when reviewing these agreements, so that looking at this article can give you an idea of what you need to pay attention to. These agreements are generally between the owner/Pledgor (“Pledgor”) of the deposit (“deposit”), the securities intermediary (i.e. the broker or bank with which the deposit is held, “broker”) and the lender (“lender”). There is a wide range of business risks that arise from some of the existing sector control agreement forms and, as securities are increasingly part of the collateral for commercial loans, we felt this was a dignified issue for bank lending managers and staff. The Code provides that taking “control” of a deposit is the preferred method for perfecting a securities interest for a deposit. A secured party can also further its security interest by filing a UCC funding statement against the Pledgor that covers the deposit, but such a UCC submission is prepared by a secure party who takes “control” of the deposit. UCC submission is a useful method of perfection for lenders who acquire a second priority security interest for a deposit and cannot acquire subordinated “control” of such an account, since either the priority lender or the broker do not allow such a subordinated security interest. (b) obtain a three-party written control agreement, signed by the Pledgor, the broker and the lender, which contains an appropriate “control language” (see below). Another method of “control” is the designation of the deposit in the name of the lender (which other method may be problematic and which does not fall within the scope of this article). We are pleased to welcome attorney Bennett Cohen of Illinois Cohen, Salk and Huvard, P.C. as a guest blogger! In the coming weeks, he will be master…