Account Control Agreement Collateral Template for the United States

An Account Control Agreement Collateral is a specialized legal document that enables secured parties to establish and perfect security interests in deposit accounts and securities accounts under United States law. This agreement creates a three-party relationship between you as the secured party, the debtor, and the account bank, providing you with the legal mechanisms necessary to control collateral accounts when securing loans or other financial obligations.

When do you need this document?

You need this agreement whenever you're extending credit secured by deposit accounts, securities accounts, or investment property held at financial institutions. Commercial lenders commonly use these agreements in asset-based lending, revolving credit facilities, and term loans where account balances serve as collateral. Investment banks and private equity firms require them for acquisition financing and leveraged buyouts. The agreement is also essential in syndicated lending arrangements where multiple lenders need coordinated control over borrower accounts. Additionally, you'll need this document when restructuring existing debt arrangements that involve account-based collateral or when establishing cash management systems that require lender oversight of debtor funds.

Key legal considerations

The primary legal consideration is establishing "control" as defined under UCC Article 9, which requires the account bank to agree to comply with your instructions without further consent from the debtor. You must carefully draft provisions governing when exclusive control can be exercised, typically upon default or specified trigger events. The agreement should clearly define the scope of the security interest, including whether it covers deposit accounts, securities accounts, or both, and specify which funds or securities are subject to the arrangement. Notice provisions are critical, requiring clear procedures for communicating instructions to the bank and notifications between parties. You must also address the bank's liability limitations and ensure the agreement doesn't conflict with existing account agreements or create unintended third-party beneficiary rights.

Legal requirements in United States

Under UCC Article 9, security interests in deposit accounts can only be perfected by control, making this agreement legally mandatory rather than optional for account-based collateral. The agreement must comply with federal banking regulations including Regulation CC regarding fund availability and Regulation D covering reserve requirements. If securities accounts are involved, you must ensure compliance with federal securities laws including the Securities Act of 1933 and Securities Exchange Act of 1934. The Bank Secrecy Act and USA PATRIOT Act requirements may impose additional obligations on the account bank regarding transaction monitoring and reporting. State law variations in UCC adoption may affect specific provisions, particularly regarding priority rules and enforcement procedures. The agreement must also comply with FDIC regulations if the account bank is federally insured, and consider Federal Reserve regulations that may impact the bank's ability to comply with control instructions.