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Control Agreement Bank Account arrangements are essential in secured lending transactions where deposit accounts serve as collateral. This agreement type, primarily used in the United States and governed by UCC Article 9, establishes the secured party's control over the account, which is necessary for perfecting a security interest in deposit accounts. The agreement defines how the account can be accessed and operated, sets out the bank's obligations regarding the account, and establishes the priority of the secured party's rights over the account. It's commonly used in commercial lending, acquisition financing, and other secured transactions where cash collateral is required.
