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Control Agreement

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CONTROL AGREEMENT

This Control Agreement (the Agreement) is made effective as of by and between:

Owner Name:

Secured Party Name:

RECITALS

WHEREAS, Owner maintains an account or accounts holding funds, securities, or other financial assets described below (the Account) with the financial institution identified herein; and

WHEREAS, Secured Party has extended or will extend credit, loans, or other financial accommodations to Owner under one or more agreements (collectively, the Obligations); and

WHEREAS, the parties desire that the Account and the assets credited thereto be subject to the control of Secured Party to perfect and maintain a security interest in the Collateral securing the Obligations.

DEFINITIONS

For purposes of this Agreement: "Collateral" means all funds, securities and other property now or hereafter on deposit in or credited to the Account and any proceeds thereof; "Control" means the right of Secured Party to obtain possession of, or to direct disposition of, the Collateral in accordance with applicable law.

SCOPE OF WORK

COLLATERAL AND ACCOUNT DETAILS

PAYMENT TERMS

The Obligations secured by this Agreement include, without limitation, the principal amount of together with accrued interest, fees and reimbursable expenses.

Late Fee: In the event of any failure by Owner to pay any amount when due under the Obligations, Owner shall pay a late fee equal to per month on the overdue amount, or the maximum permitted by law, whichever is less.

TERM AND TERMINATION

Term Commencement Date: . Termination Date: .

Either party may terminate this Agreement upon written notice delivered at least days prior to the proposed termination date, provided that termination shall not affect Secured Party's rights with respect to Collateral credited to the Account prior to termination.

PERFECTION, CONTROL, AND ACKNOWLEDGMENT

Owner grants Secured Party a security interest in the Collateral. Owner and Secured Party agree that, to the fullest extent permitted by applicable law, Secured Party shall have Control of the Account, and the account bank or financial institution shall comply with instructions from Secured Party with respect to disposition of funds in the Account when a default has occurred and is continuing.

Owner authorizes the financial institution holding the Account to accept directions from Secured Party and to comply with all such directions without further notice to Owner, except as required by law.

REPRESENTATIONS AND WARRANTIES

Owner represents and warrants that (a) Owner has good and marketable title to the Collateral free of any other security interest except those disclosed in writing to Secured Party; (b) Owner has full power and authority to grant the security interest created by this Agreement; and (c) the execution and performance of this Agreement will not violate any other agreement to which Owner is bound.

RIGHTS, REMEDIES AND DEFAULT

Upon occurrence of an Event of Default, Secured Party shall have all rights and remedies available under this Agreement, the Obligations, and applicable law, including without limitation the right to instruct the account bank to transfer or apply funds in the Account to reduce the Obligations, to set off, and to exercise all rights of a secured party under the applicable commercial laws.

CONFIDENTIALITY

Each party shall keep confidential and shall not disclose to any third party any nonpublic information received from the other party in connection with this Agreement, except (a) to its auditors, legal counsel, or other advisors bound by confidentiality obligations, (b) as required by law or regulatory authority, or (c) to enforce rights under this Agreement.

NOTICES

Notices shall be in writing and shall be deemed given when delivered personally, on the date delivered by a nationally recognized overnight courier, or on the third business day after mailing by certified mail, return receipt requested, to the notice addresses provided above or to such other address as a party may designate by notice to the other.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to conflict of laws principles.

ENTIRE AGREEMENT

This Agreement, together with the underlying loan documents and security agreements referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written.

SEVERABILITY; AMENDMENT

If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain effective. No amendment or waiver of any provision shall be effective except in a written instrument signed by the parties.

Owner (Printed Name):

By:

Date:

Secured Party (Printed Name):

By:

Date:

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What a Control Agreement Is and when it matters

A Control Agreement is a written agreement among a debtor, a secured party (typically a lender), and a third party custodian (usually a bank or securities intermediary) that grants the secured party control over specific collateral without transferring possession. Common in secured lending, deposit account financing, and securities financing, a Control Agreement clarifies rights to withdraw, freeze, or apply account proceeds to satisfy an obligation. It complements UCC Article 9 perfection steps and often accompanies a security agreement, UCC filing, and lender instructions to the depository institution.

Why a Control Agreement is important for secured transactions

A Control Agreement reduces practical and legal uncertainty by creating an agreed mechanism for a secured party to access or control collateral held by a third party, improving the effectiveness of perfection under UCC Article 9 and reducing the risk that the collateral will be inaccessible during default.

Why a Control Agreement is important for secured transactions

Who typically executes and relies on a Control Agreement

Control Agreements are signed in multi-party financing arrangements where collateral is held by an intermediary and the lender requires a contractual control mechanism.

  • Banks and depository institutions that hold deposit accounts or securities for borrowers and need defined instructions about third-party creditor rights.
  • Lenders and secured creditors who require a contractual route to exercise remedies without physical possession of collateral.
  • Borrowers or account holders who consent to a lender's control rights to obtain financing or structured loans.

Parties should confirm the Control Agreement's terms align with the security agreement, the UCC-1 financing statement, and the custodian's internal policies before signing.

Core elements to include in a professional Control Agreement

A well-drafted Control Agreement is concise but specific: it identifies the collateral, names all parties, defines control mechanics, addresses default remedies, and ties into the governing security agreement and financing statements.

Parties

Full legal names of debtor, secured party, and custodian.

Collateral Description

Specific account identifiers, securities CUSIPs, or collateral categories.

Control Mechanism

How the custodian will act on secured party instructions.

Default Remedies

Steps custodian takes on default, including application of proceeds.

Conflicting Claims

Acknowledgment of priority relative to other security interests.

Governing Law

Choice of law and venue for disputes; cross-reference to security agreement.

How to complete a Control Agreement — step by step

Follow these sequential steps to prepare, verify, and finalize a Control Agreement with minimal friction.

  • 01
    Gather Documents: Collect security agreement, UCC-1, account statements.
  • 02
    Populate Fields: Enter names, account IDs, effective date.
  • 03
    Custodian Review: Send draft to bank for officer approval.
  • 04
    Execute & Record: Obtain signatures and ensure UCC-1 mirrors terms.

Configuring an online Control Agreement workflow

Set up digital routing and authentication to match the transaction's risk profile and the custodian's acceptance criteria.

Field Configuration
Signer Order Lender first, then custodian, then debtor
Authentication Email plus SMS code or ID verification for custodian
Attachments Include referenced UCC-1 and security agreement PDF
Retention Enable audit trail and downloadable signed PDF

Typical routing and submission flow for a Control Agreement

A clear routing sequence ensures all parties and the custodian receive and endorse the same document version.

  • Upload Document: Sender uploads signed draft or template to the eSignature platform.
  • Place Fields: Add signature, date, and officer acknowledgement fields where required.
  • Send to Parties: Distribute to lender, debtor, and custodian in the agreed order.
  • Confirm Acceptance: Custodian returns executed copy and confirms internal posting or account notation.

Digital signing considerations and platform requirements

Ensure the chosen eSignature platform supports the custodian's authentication and evidence requirements before e-executing a Control Agreement.

  • Authentication: Multi-factor options and ID proofing are often needed by banks.
  • Audit Trail: Time-stamped logs and signer attribution must be preserved.
  • File Formats: Signed PDF/A export and long-term storage formats are recommended.

Confirm with the custodian whether they accept remote electronic signatures, require wet-ink notarization, or insist on specific signer authentication levels.

Timing and common deadline expectations

Control Agreements are often time-sensitive; coordinate execution with funding, UCC filing, and account changes to avoid perfection gaps.

Coordinate with Funding:

Execute before or at loan closing to ensure collateral availability.

UCC-1 Timing:

File UCC-1 promptly; priority may depend on filing date.

Custodian Posting:

Allow 1–5 business days for bank notation.

Document Retention:

Keep executed copies for the life of the loan.

Renewals:

Update control terms when accounts or institutions change.

Key milestones from draft to perfected control

Track these milestones sequentially to confirm the secured party obtains practical and legal control over the collateral.

01

Draft Completion

Finalize language and identify account details and parties.

02

Bank Review

Custodian confirms acceptable language and internal routing.

03

Execution

All parties sign using approved authentication method.

04

UCC Filing & Posting

File financing statement and confirm custodian notation.

Common pitfalls to avoid when preparing a Control Agreement

  • Using an informal or vague collateral description that does not match account identifiers or security agreement language, causing mismatch disputes.
  • Failing to confirm the custodian’s required signer (bank officer) or internal acknowledgment format, leading to rejection or delay.
  • Omitting the effective date or using inconsistent dates between control agreement and UCC-1, creating priority uncertainty.
  • Relying on a scanned, unsigned template without verifying whether the custodian accepts electronic execution under its policies.

Consequences of an incorrect or incomplete Control Agreement

Unperfected Lien: Loss of priority
Enforcement Delay: Longer remedy timelines
Custodian Rejection: Document not acknowledged
Priority Disputes: Competing creditors challenge
Statutory Noncompliance: Failure to meet UCC rules
Increased Costs: Legal and administrative fees

Security and compliance expectations for electronic Control Agreements

Encryption: TLS 1.2/1.3 in transit; AES-256 at rest
Audit Trail: Timestamped logs and signer metadata
ESIGN / UETA: Compliant with federal and state e-sign laws
HIPAA BAA: Available when PHI is involved
21 CFR Part 11: Supported for regulated records
Certifications: SOC 2 Type II and ISO 27001

Practical examples from organizations using digital agreements

These real-world comments illustrate platform-level benefits signers report when moving multi-party documents online.

Optica Ventures — COO

The interface is simple and easy-to-use for our team; more importantly, it is just as easy for our customers.

  • Used for routine investor documents and loan-related paperwork to reduce turnaround time.
  • The simplicity for both internal teams and external counterparties helps accelerate closings without requiring in-person signings.

Martin Properties — Founder

I can process and execute all of these documents online with 100% compliance and built-in security. Whether on mobile or working offline, I can get forms back to their necessary parties efficiently.

  • Applied to lease, escrow, and mortgage-related control arrangements.
  • Mobile and offline capabilities enabled timely execution for property closings and reduced delays from courier or in-person signings.

Practical tips for accurate and efficient completion

Apply these best practices to reduce rework and ensure the Control Agreement is acceptable to the custodian and enforceable in default.

Confirm Custodian Language
Request the custodian’s preferred control agreement template early. Using their accepted language speeds approval and prevents rejections.
Match UCC-1 Details
Ensure account identifiers and party names exactly match the financing statement to maintain priority and reduce challenges.
Use Clear Collateral IDs
Identify accounts or securities with precise account numbers, titles, and CUSIPs where applicable to avoid ambiguity.
Document Signing Method
Confirm whether the custodian accepts electronic signatures, requires notarization, or expects in-person officer acknowledgement.

Selected eSignature vendor comparison for Control Agreement workflows

Compare basic pricing and key compliance features relevant to executing multi-party Control Agreements; signNow is listed first per vendor ordering guidelines.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial Yes, 7-day trial Yes, limited trial Yes, limited trial Yes, limited trial Yes, limited trial
Bulk Send Yes (Premium) Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes (BAA) Yes (BAA) Yes (BAA) No No

Frequently asked questions and troubleshooting

Answers to common questions about preparing, executing, and enforcing Control Agreements in U.S. transactions.


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