UCC 9-114 deposit account control - lender demanding original bank letters for perfection
Equipment financing deal going sideways because our bank is insisting on original signed control agreements for every deposit account under UCC 9-114. The borrower has 8 different accounts across 3 banks and we're getting pushback on the control method requirements. Two of the banks are saying they'll only do account control agreements, not deposit account control agreements, and I'm not sure if that satisfies 9-114's perfection requirements. The loan closes next week and we're stuck on whether electronic signatures on the deposit account control docs are sufficient or if we need wet signatures. Has anyone dealt with banks that refuse to acknowledge the difference between general account control and UCC 9-114 specific deposit account control? This is a $2.8M credit facility and I can't afford to have unperfected security interests.
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Cole Roush
UCC 9-114 can be tricky with deposit accounts because not all banks understand the control requirements. The key is that you need control under 9-104, not just any control agreement. Some banks will try to use their standard account agreements which don't give you the control necessary for perfection. Have you specifically asked for agreements that reference UCC 9-104 control requirements?
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Jasmine Hancock
•That's exactly what I'm running into. Two of the three banks keep sending me their standard commercial account agreements and saying that's sufficient. I've explained multiple times that we need 9-104 control but they're not getting it.
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Scarlett Forster
•Banks are notorious for this. I've had to escalate to their legal departments before. Sometimes their front-line commercial officers don't know the difference between account control and UCC control.
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Arnav Bengali
Electronic signatures should be fine for 9-114 purposes as long as the control agreement meets the substantive requirements. The signature method isn't what matters for perfection - it's whether you actually have control under 9-104. But you're right to be concerned about the banks not understanding the distinction.
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Sayid Hassan
•Agree on the electronic signatures but I've seen deals where banks later claimed they didn't understand what they were signing. Better to have crystal clear language in the control agreements.
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Jasmine Hancock
•The electronic signature issue is secondary to getting the right agreements in the first place. If the banks won't do proper 9-104 control agreements, the signature method is irrelevant.
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Rachel Tao
I ran into this exact situation last month with a manufacturing client. Three banks, multiple deposit accounts, same confusion about control agreements. What saved me was using Certana.ai's document verification tool - I uploaded the bank agreements they were sending versus proper UCC-9 control agreement templates and it instantly flagged the language differences. Made it easy to show the banks exactly what clauses were missing for 9-104 control. The tool highlighted that their standard agreements didn't include the secured party instruction rights required for perfection.
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Derek Olson
•That's interesting - how does the verification tool work exactly? I'm dealing with similar issues on deposit account control and could use something to help identify the gaps.
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Rachel Tao
•You just upload the PDFs and it cross-checks the language against UCC requirements. For deposit accounts, it specifically looks for the 9-104 control elements and flags missing provisions. Really helpful when you're trying to explain to banks why their standard forms don't work.
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Danielle Mays
•Sounds like it could save a lot of back and forth with banks who don't understand the UCC requirements. I've wasted weeks trying to explain control agreement language to bank officers.
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Roger Romero
For 9-114 deposit account perfection, you absolutely need proper control under 9-104. The three methods are: (1) secured party as account holder, (2) deposit account in secured party's name, or (3) control agreement with the bank. Most lenders use method 3, but the agreement has to give you the right to direct disposition of funds without further consent from the debtor. If the banks are only offering standard account agreements, those typically don't include that language.
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Jasmine Hancock
•Method 3 is what we're trying to do but you're right about the language. The standard agreements they're sending don't give us disposition rights without debtor consent.
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Anna Kerber
•This is why I always send banks a form control agreement first, before asking what they'll accept. Most of them will sign it if you present it as the standard rather than asking them to create something.
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Niko Ramsey
•Good strategy. I've found that if you frame it as 'this is what we need for regulatory compliance' rather than 'can you do this special thing' banks are more cooperative.
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Seraphina Delan
Watch out for banks that will sign control agreements but then impose internal restrictions that effectively negate the control. I've seen banks sign the agreement but then have internal policies that require debtor consent for any fund transfers. That doesn't give you true control for 9-104 purposes.
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Jabari-Jo
•This is a huge issue. The agreement might look perfect on paper but if the bank's internal procedures don't match, you might not have perfection when you need it.
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Kristin Frank
•How do you verify that the bank's internal procedures match the control agreement? Just ask them directly?
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Seraphina Delan
•I usually ask for a copy of their internal procedures manual section that covers control agreements, or at least a written confirmation that they'll honor the agreement terms without additional authorization.
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Micah Trail
The 8 accounts across 3 banks is going to be a nightmare for monitoring too. Even if you get proper control agreements, you'll need to track all those accounts for changes, closures, new accounts, etc. Have you thought about requiring the borrower to consolidate accounts?
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Jasmine Hancock
•We tried to get them to consolidate but they have operational reasons for keeping the accounts separate. Different business units, different states, that kind of thing.
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Nia Watson
•At minimum, make sure your loan agreement requires notice of any new deposit accounts and automatic control agreements for new accounts over a certain threshold.
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Alberto Souchard
I'm confused about something - if you have a security interest in the deposit accounts under 9-114, do you also need to file UCC-1s for the accounts or is control sufficient for perfection?
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Katherine Shultz
•Control is sufficient for perfection on deposit accounts. You don't need to file UCC-1s for deposit accounts where you have proper control under 9-104.
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Marcus Marsh
•That's one of the benefits of deposit account control - no filing requirements. But you have to maintain the control relationship throughout the life of the loan.
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Alberto Souchard
•Thanks, that makes sense. So the control agreement is everything for deposit account perfection.
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Hailey O'Leary
Have you considered having the borrower open new accounts at a bank that's more UCC-friendly and transfer the funds? Sometimes it's easier than fighting with difficult banks, especially if you're dealing with smaller community banks that don't do many secured transactions.
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Cedric Chung
•This could work but might be disruptive to the borrower's operations. Plus you'd need to make sure all the automatic payments and deposits get transferred properly.
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Talia Klein
•The timing might not work either if the loan closes next week. Opening new accounts and transferring everything could take longer than that.
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Maxwell St. Laurent
Just dealt with this same issue on a $4M credit facility. What worked was having our borrower's relationship manager at each bank escalate internally to someone who understood UCC control requirements. Sometimes you need to go above the commercial banker to their legal or compliance team. Also, I used a document checking service that helped me prepare comparison charts showing exactly what language was missing from their forms versus what 9-104 requires.
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PaulineW
•Which document checking service did you use? I could use something like that for future deals.
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Maxwell St. Laurent
•Certana.ai - you upload the agreements and it compares them against UCC standards. Really useful for deposit account control agreements because it knows the specific 9-104 requirements.
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Annabel Kimball
Update us on how this resolves! I'm dealing with a similar situation with deposit account control and curious whether you get the banks to cooperate or end up having to restructure the deal.
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Jasmine Hancock
•Will do. The escalation approach seems like the best option at this point. I'm having the borrower's main contacts at each bank connect me with their legal teams directly.
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Chris Elmeda
•Good luck! Bank legal teams usually understand UCC requirements much better than the commercial side.
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Jean Claude
•Keep us posted - these deposit account control issues seem to be getting more common and it would be helpful to know what works.
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Zane Hernandez
I've seen this exact scenario play out multiple times, and the key is persistence with the right people at each bank. Most commercial bankers don't understand the difference between their standard account control language and what's actually required for UCC 9-104 control. You need to get to someone who understands that the control agreement must give you the unilateral right to direct disposition of funds without any further consent from the debtor. I'd recommend preparing a side-by-side comparison showing their standard language versus the required 9-104 provisions - it makes the gaps crystal clear. Also, don't accept any agreement that has carve-outs or exceptions that would require debtor consent for fund transfers. With a $2.8M facility, you can't afford to have control that's only theoretical.
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Cynthia Love
•This is really helpful - the side-by-side comparison idea is brilliant. I've been struggling to explain to banks why their forms don't work, but showing them visually what's missing would probably be much more effective. Do you have a template for that kind of comparison, or do you just create it case by case? With multiple banks involved like Jasmine's situation, having a standard format could save a lot of time.
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