What Is A Daca Agreement

First of all, there are two types of deposit account control agreements: assets and liabilities. CAACs are three-party agreements between a lender (also often referred to as a secured party), a borrower and a custodian institution. The purpose of a DACA is for a lender to take control of its borrower`s deposit accounts held with a custodian other than the lender so that the lender can perfect its collateral on the deposit accounts. Some CADs are structured in such a way that THE LENDER HAS EXCLUSIVE CONTROL OVER the deposit accounts IMMEDIATELY AFTER THE EXECUTION OF THE DACA. Other CAACs allow the borrower to access, withdraw and transfer funds into deposit accounts until the lender informs the custodian institution that the lender is taking sole control and the borrower no longer has the right to access, withdraw or transfer funds from deposit accounts. If you have involved an experienced banking partner in your process at an early stage, you may be ready for negotiations. At Enterprise, you can expect the following: A Deposit Account Control Agreement (DACA), also known as a Control Agreement, is a tripartite agreement between a depositing customer (the debtor), a depositing customer`s lender (the secured party), and a bank. Active Deposit Account Control Agreement – A control agreement that directed the bank to receive disposition instructions from the secured party (not the debtor). Deposit Account Control Agreement (DACA) – A tripartite agreement between a customer (debtor), a secured party (lender) and a bank that allows the lender to perfect a security right in the customer`s funds by taking control of the deposit account (UCC § 9-104). The first step a custodian needs to take to protect themselves is to start with a good DACA form. DACA forms provided to a custodian institution by a lender are not created taking into account the unique operational, business and legal needs of the depositary institution.

And most likely, they will include provisions that are more favorable to lenders than the industry market. By creating and emphasizing the use of its own DACA form, a depositary institution can be confident that its unique operational needs are being taken into account, including notification information and time spent implementing instructions from other parties. In addition, through the systematic use of a separate form, individuals implementing CAACs in the custodian institution are more aware of the depositary institution`s obligations under DACA, making it less likely that an error or oversight will be executed. Often, those responsible for implementing CAACs are not familiar with the review and interpretation of agreements. Therefore, an unknown DACA form will be difficult to interpret in order to understand all the obligations of the custodian bank. .