What is the Deposit Vault Control Agreement?

The deposit vault control agreement defines the rights and duties of all included parties in relation to the SecureClose Vault.

If there is a secured party, it explains how the SecureClose Vault environment is controlled by that secured party (the lender) without consent of the borrower (Dealer), and how the custodian (SecureClose) of the vault is directed and by whom in any circumstance.

Once Electronic Chattel Paper (ECP) is deposited into their vault, the secured party will have full control over the ECP and SecureClose will assist the secured party in any circumstance, for instance, in the event of default.

Control is equal to Possession in this case for the secured party.

To enforce your security interest in the deposit Vault to third parties, the security interest must be perfected.

A security interest in an electronic vault can be perfected by taking control of the account.  All of the borrower’s ECP will be deposited into the Secured Party’s vault, and since the Secured Party has full control over the vault and it’s contents, nothing further may be necessary for perfection.

For the vault to be controlled by the Secured Party it must contain, as the UCC terms it, an authenticated record of the original.  This can be done through a deposit vault control agreement as the bower deposits the ECP into the Secured Party’s vault, maintained by the custodian.  The agreement will grant the Secured Party “Control” of the account, and the security interest is perfected once the ECP is deposited into their control.

The deposit vault control agreement typically includes the following key provisions:

1) A representation from the borrower that the vault is a “Deposit Vault”

2) A representation from SecureClose that it is a “Custodian” as defined in the UCC Article 9 105.

3) A covenant from the Custodian that it agrees to comply with the instructions from the Secured Party, without further consent by the borrower.

4) A covenant that the custodian will not enter into another deposit vault control agreement with any other third party or any other agreement relating to the borrower’s vault.

To see an example of the SecureClose Deposit Vault Control Agreement, contact sales@secureclose.net