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0 tracked cards Civil Law and Land Titles and Deeds

Creditor: Apex Credit Partners, LLC. Debtor: EnerTrust Manufacturing, Inc. The loan is secured by a security interest in Debtor's funds held in a client trust account at Bank Union. A Control Agreement is executed among Debtor, Bank Union, and Apex, providing that Bank Union will honor Apex's instructions regarding the client trust account and will not permit withdrawals by Debtor without Apex's directive. Debtor defaults, and Bank Union complies with Apex's directives, preventing any withdrawal by Debtor. (a) Has Apex’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 closes the client trust account at Bank Union and opens a new client trust account at Bank Omega, what is the effect on Apex's control and perfection, and what steps are necessary to preserve perfection?

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Yes; perfected by control, but if the account is closed and opened at Bank Omega, perfection automatically transfers to Bank Omega without a new control agreement. Yes; perfected by control. Elements: (1) valid control agreement among debtor, bank, and creditor; (2) bank bound to follow the creditor s instructions; (3) debtor withdrawals restricted to the creditor s directives. If the debtor closes the client trust account at Bank Union and opens a new one at Bank Omega, perfection is terminated unless a new control agreement with Bank Omega is executed to re‑establish control. No; control cannot perfect a security interest in client trust funds under RA 11057. No; perfection by control cannot apply to client trust accounts under RA 11057.

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