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0 tracked cards Civil Law and Land Titles and Deeds

Creditor: Greenline Capital Partners, LLC. Debtor: TerraNova Construction, Inc. The loan is secured by a security interest in Debtor's funds held in an investment account at Bank Harbor. A Control Agreement is executed among Debtor, Bank Harbor, and Greenline, providing that Bank Harbor will honor Greenline's instructions regarding the investment account and will not permit withdrawals by Debtor without Greenline's directive. Debtor defaults, and Bank Harbor complies with Greenline's directives, preventing any withdrawal by Debtor. (a) Has Greenline'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 investment account at Bank Harbor and opens a new investment account at Bank Summit, what is the effect on Greenline's control and perfection, and what steps are necessary to preserve perfection?

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Yes. The control agreement with Bank Harbor suffices, and the account move to Bank Summit would automatically preserve perfection without any action. Yes. However, Greenline must file a financing statement with the Securities and Exchange Commission to maintain perfection across different banks. No. The bank's compliance alone is not enough to perfect by control; without a control agreement, there is no perfection. Yes. Greenline’s security interest has been perfected by control. Perfection by control under RA 11057 requires (i) a control agreement binding Bank Harbor to follow Greenline's instructions; (ii) Bank Harbor’s obligation not to permit withdrawals by Debtor without Greenline's directive; and (iii) Greenline’s control remaining effective while the funds stay in Bank Harbor. If Debtor terminates the investment account and moves to Bank Summit, Greenline must obtain a new Control Agreement with Bank Summit to preserve perfection in the new account.

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