I was unable to find a quick reference - I'm foggy on the details of the revised UCC-9, but thought it now required filing a UCC statement to perfect on these types of secured loans. Is there an easy reference or answer to this question?

I'm not sure why you would want to file a UCC statement and rely on that method, most loans secured by such collateral are secured through possession of the instruments. If the collateral is held by another institution, you get them to sign a pledge/control agreement.

The rules didn't change for accounts that your bank holds.
There are some specific requirements when the collateral is held by another bank but I don't think a UCC is involved.

Agree with second and third posts.

If the account is at a third bank a UCC-1 will cover it, but is subject to being trumped. You want a control agreement.

If the account is at your bank, nothing is needed, but you may of course want a blanket UCC-1.

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If the account is at a third bank a UCC-1 will cover it......

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No it won't. You do not file a UCC-1 to secure a loan with a deposit account. You have to have "control". That is accomplished through the actions described in UCC 9-104. That is why I orignally said, why would you want to do that??

The problem is that a few states, like Kansas and Oklahoma, define a CD, that is in writing but is not negotiable (not governed by Article 3), as an instrument and not a deposit account. Instrument may be perfect by filing a UCC1 or by possession and possession will not trump a filing unless the one in possession has purchase the instrument.

At my Oklahoma Bank we perfect a CD loan by "control" which means we place a hold on the account. We do not file a UCC. We consider our CD's to be book-entry (accounts). They sign a Security Agreement for Deposit Accounts. This appears to be a common practice in Oklahoma. I checked with several of my banking friends and they do the same.

It is the practice at my bank that we do not take a CD for collateral from another insitution. We ask the customer to open the CD with us.

If we take securities from a broker we require a Secuity and Control Agreement (most brokers require their own forms). We do not file a UCC on this either since we have control.

I want to apologize for this comment before I make it. This subject is soooo frustrating but my comments may offend. This is not my intent.

First, it does not matter what the bank considers the CD, whether it is an instrument or a deposit account, the court makes the final decision. You need to know the definition based on the appropriate state law.

Second, it does not matter what others do. Their doing does not make it right or wrong. (Remember the cliff example you give your children when they use the argument "but everyone does it.")

We need to base our doing on the law and not on what we think. What is a CD? That is a state specific question, but I do not know any state that would NOT consider a ledger CD a "Bank Account." That is the first thing the court would need to determine is whether there a writing and whether such writing is an instrument or a bank account. That is state specific. You need to know your state's definition.

If a CD is a bank account it can ONLY be perfected by the secured party obtaining and maintaining, "Control." (9-312)

There are three was to obtain control:
1. The secured party is the depository institution with which the deposit account is maintained;
2. The debtor, secured party, and depository institution have agreed in a signed agreement that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; (this is a control agreement); and
3. The secured party becomes the depository institution’s customer with respect to the deposit account. (9-103)

A hold on the account is not required to obtain control. If you are the depository institution, you have control. You put the hold on the account so there will be money left in the account to pay off the loan but it has nothing to do with perfection or control.

No offense taken :-)
I like striaght forward answers. Especially if I may be way off on my thinking. It keeps me humble.

On the securites side......would you also file a UCC if you have control?

No, as long as you do a UCC search. I commonly recommend doing both, but only to force the UCC search.

A different twist....If you take a securities account and use the secondary method of perfection (filing a UCC) should you still have the customer sign a Pledge and Control Agreement or would a regular Security Agreement be OK. This particular broker does not take assignments. It is secondary collateral but I want to document properly. The current platform we use has two different types of forms.

A pledge agreement is a security agreement that is used when the secured party is taking possession of the collateral. An assignment is a security agreement that is used when you have the debtor transfer ownership to the secured party (it is still a security interest and not a true change in ownership, but is obtained by changing technical ownership).

The control agreement is a method of perfection and not a method of obtaining a security interest. However, it could also include wording that would meet the requirements for a security agreement (not common – most do not have the required conveyance clause). Note, the control agreement is a tri-party agreement. It is between the person with control (depository institution or securities intermediary), the debtor and the secured party. All three must sign for it to be an effective method of perfection.

A security agreement, in one of its many forms, is always needed to have a security interest. You can perfect a security interest in investment property (not deposit accounts) by filing a financing statement, but your priority will be inferior to a person that obtains control.

what if you have a 3-yr loan secured by a CD that originated in say 2008, and in the meantime the CD securing the debt matures and is renewed. I have seen where a new Security Agreement was issued each time the CD is renewed and there is no reference to the original loan date and security agreement on the new SA. Since the original SA allows for renewals, substitutions, etc., I don't believe they need to be renewing the SA and dating the same date as the renewed CD. Would doing this legally affect the original agreement?

Any CD secured loan will mature on the maturity of the CD. 3 year CD 3 year loan; 6 months remaining on CD then a 6 month loan