Perfecting Security Interests in Deposit Accounts, Securities Accounts, and Other Investment Property

Description

UCC Article 9 provides debtors with the ability to use their bank accounts, securities accounts, and other investment property as collateral to obtain credit. There are specific considerations to create and perfect a security interest in these collateral types and for the lender's security interest to have the desired priority.

For the security interest to be created and to attach, the security agreement should contain a sufficient description of the deposit accounts, securities accounts, and other investment property collateral. For the security interest to be perfected and to achieve the desired priority, the secured party usually will want to--and sometimes need to--obtain "control" over collateral of these types.

A frequently used method of obtaining control of collateral is for the lender, the borrower, and the depositary bank or securities intermediary to enter a control agreement covering that collateral. Secured parties need to consider the potential pitfalls in control agreements and steps to protect their interests in the control agreement's collateral.

Listen as our authoritative panel of commercial finance attorneys discusses the UCC Article 9 provisions unique to deposit accounts, securities accounts, and other investment property as collateral, as well as discusses best practices for negotiating and drafting deposit and securities account control agreements and avoiding common pitfalls.