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Deposit account control agreement DACA
Also called control agreement, blocked account agreement, BAA.
A three-party agreement among a borrower, its lender and its bank that gives the lender control of a deposit account, which is how a security interest in that account is perfected.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Under UCC Article 9, a security interest in a deposit account is perfected by control, not by filing. Control means the bank has agreed in writing to follow the secured party's instructions about the account without further consent from the customer. That written agreement is the DACA.
Two flavors. A blocked or full-control agreement sweeps funds to the lender from day one, typical in factoring lockbox arrangements and tighter ABL facilities. A springing agreement leaves the customer in charge until the lender delivers a notice of exclusive control, at which point the bank stops taking the customer's instructions.
The depository bank is a party, uses its own form, charges a fee, and negotiates slowly. It will preserve its own rights to charge back returned items and deduct its fees ahead of the lender.
Where this one catches people
A springing agreement feels harmless at closing because nothing changes. What matters is the trigger. Read what entitles the lender to send the notice, whether it needs an event of default or merely a belief that one may occur, and whether you get notice yourself. Once the notice is delivered the business loses access to its own operating cash on the same business day.
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Deposit account control agreement — common questions
What does deposit account control agreement mean?
A three-party agreement among a borrower, its lender and its bank that gives the lender control of a deposit account, which is how a security interest in that account is perfected.
Where does deposit account control agreement catch people out?
A springing agreement feels harmless at closing because nothing changes. What matters is the trigger. Read what entitles the lender to send the notice, whether it needs an event of default or merely a belief that one may occur, and whether you get notice yourself. Once the notice is delivered the business loses access to its own operating cash on the same business day.
Is deposit account control agreement the same as an interest rate?
Deposit account control agreement is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does deposit account control agreement apply to?
Business Line of Credit, Invoice Financing, Asset-Based Lending.
Is there a worked example of deposit account control agreement?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside deposit account control agreement?
Borrowing base, Event of default, Lockbox, Perfection, Sweep.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.