Collateral Account Control Agreement

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A collateral account control agreement (CACA) is a legal agreement between a lender and borrower that provides the lender with control over the borrower`s collateral account. This type of agreement is often used in secured lending transactions, where the lender wants to ensure that the collateral securing the loan remains protected.

The collateral account control agreement allows the lender to take control of the borrower`s collateral account, which is typically a cash account that holds the proceeds from the sale of the collateral. By having control over the account, the lender can ensure that the funds are used to pay off the loan in the event of default.

In addition, the collateral account control agreement provides the lender with certain rights and protections. For instance, the agreement may require the borrower to maintain a certain balance in the collateral account or to provide notice before withdrawing funds. The lender may also have the right to freeze the account in the event of default or to apply the funds to outstanding debts owed by the borrower.

Overall, a collateral account control agreement is an important tool for lenders seeking to protect their assets and ensure that they are able to recover their investment in the event of default. If you are considering a secured lending transaction, it is important to work with an experienced attorney who can help you negotiate and draft a comprehensive collateral account control agreement that meets your needs.