Also known as:perfected by control · perfect by control · perfection-by-control · control perfection · UCC perfection by control
Written by attorneys · grounded in primary & secondary sources — see below
A method of perfecting a security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, or letter-of-credit rights. The secured party obtains control under the designated UCC sections. For all listed collateral except investment property, the interest remains perfected only while the secured party retains control.
Sources & Authorities
How it applies
Common Examples
2
Bank Obtains Control Over Deposit Account
Premier Manufacturing borrowed from Pacific Bank and granted a security interest in its operating deposit account. Pacific Bank, as the depository institution, took steps to direct all dispositions from the account. When Premier defaulted, Pacific Bank's interest attached to the funds because it held control at the time of default.
Control Lost After Initial Perfection
Prime Logistics granted Phoenix Technologies a security interest in a controllable payment intangible. Phoenix Technologies obtained control through an agreement with the relevant intermediary. When the intermediary later revoked the arrangement and Phoenix no longer directed dispositions, its perfected status ended even though the underlying obligation remained unpaid.
Put it into practice
Test Yourself
10
Practice Questions5
· 8 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Casebooks
Course Outlines
Study Supplements
Common questions
Frequently Asked
4
Which types of collateral can be perfected by control?+
Control perfects security interests in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, and letter-of-credit rights.
Supporting sources
How long does perfection by control last?+
Perfection by control continues only while the secured party retains control of the collateral.
Supporting sources
Is filing ever sufficient to perfect an interest in a deposit account?+
Filing alone does not perfect a security interest in a deposit account. Control is the exclusive method of perfection for that collateral.
Supporting sources
What happens when a secured party changes from filing to control?+
Perfection remains continuous if the secured party is perfected by one authorized method when the second method takes effect and no gap occurs between the two methods.
Supporting sources
Secured TransactionsRights of third parties; perfected and unperfected security interests; rules of priority (§ 9-301, et seq.) · Requirement of filing and steps to be taken for perfection (§§ 9-308 through 9-316; § 9-501, et seq.); assignment of security interest (§§ 9-514, 9-519)UBEFoundational