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All Jurisprudence based

0 tracked cards Civil Law and Land Titles and Deeds

Debtor: Pacific Gate Constructors, Inc. borrows from StoneBridge Finance, LLC. The loan is secured by a security interest in Debtor's funds held in a Performance Escrow Account at Bank Crest. A Control Agreement is executed among Debtor, Bank Crest, and StoneBridge, providing that Bank Crest will honor StoneBridge's instructions regarding the escrow account and will not permit withdrawals by Debtor without StoneBridge's directive. Debtor defaults, and Bank Crest complies with StoneBridge's directives, preventing any withdrawal by Debtor. (a) Has StoneBridge's security interest been perfected by control? (b) State the governing rule and the essential elements for perfection by control under RA 11057. (c) If Debtor terminates the escrow arrangement at Bank Crest and opens a new escrow arrangement at Bank Summit, what is the effect on StoneBridge’s control and perfection, and what steps are necessary to preserve perfection?

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Yes; If the debtor changes escrow banks, the secured party must re-establish control by signing a new Control Agreement with the new bank to cover the new escrow arrangement. Yes; The control agreement must be supplemented by a filing with the Central Bank to be effective against the debtor and third parties. Yes; The control over the escrow funds in Bank Crest continues to perfect for the original escrow, and automatically extends to any new escrow opened for the same purpose without a new Control Agreement if the parties intend the arrangement to be continuous. Yes; Perfection by control exists through a valid Control Agreement binding Bank Crest to follow StoneBridge’s instructions; If the escrow is terminated and a new escrow account is opened at Bank Summit, StoneBridge must execute a new Control Agreement with Bank Summit to cover the new account in order to preserve perfection.

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