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A Control Agreement lets a lender take control over a borrower's financial accounts, typically as part of securing a loan. It's a three-way contract between a lender, borrower, and the financial institution holding the borrower's accounts, common in Canadian secured lending transactions.

Under Canadian personal property security laws, these agreements give lenders "perfected" security rights over deposit accounts and investments. They're especially important in commercial lending because they help lenders maintain their priority position and quickly access collateral if the borrower defaults. Banks often require them when lending to businesses that rely heavily on cash flow or maintain significant investment accounts.

A Control Agreement becomes essential when lending against deposit accounts or investment portfolios in Canada. Banks and financial institutions need this protection most when extending large commercial loans, especially to businesses with significant cash holdings or investment accounts that serve as collateral.

The timing matters most during loan negotiations and before funds are released. Getting a Control Agreement in place early protects the lender's security interest and prevents other creditors from claiming priority over the same accounts. It's particularly crucial for asset-based lending, working capital facilities, and when financing companies with complex cash management systems.

• Direct Control Agreements give lenders immediate control over accounts without extra steps or notifications
• Notice-Based Control Agreements require the bank to notify the account holder before taking control
• Hybrid Control Agreements combine features of both types, often using trigger events to shift from notice-based to direct control
• Multi-Party Control Agreements accommodate complex lending structures with multiple secured parties sharing priority
• Investment Account Control Agreements specifically address securities accounts and include special provisions for trading activities

• Secured Lenders: Banks, credit unions, or financial institutions that require control over accounts as loan security
• Account Holders: Businesses borrowing money who agree to give lenders control over their deposit or investment accounts
• Depository Banks: Financial institutions holding the accounts who must follow instructions from the secured lender
• Corporate Lawyers: Draft and negotiate the agreements, ensuring compliance with Canadian security laws
• Financial Officers: Monitor and manage account access and control rights on behalf of their organizations

• Account Details: Collect full account numbers, types, and locations for all accounts being controlled
• Party Information: Gather legal names, addresses, and authorized signatories for lender, borrower, and depository bank
• Security Terms: Define the specific rights being granted and any limitations on account access or control
• Notice Requirements: Establish communication protocols and response times for account instructions
• Operating Rules: Specify how routine transactions will be handled and when control rights activate
• Document Review: Use our platform to generate a legally sound agreement that includes all required elements under Canadian law

• Party Identification: Full legal names and addresses of lender, borrower, and depository institution
• Account Details: Precise description of all controlled accounts, including account numbers and types
• Control Rights: Clear statement of lender's authority to direct account disposition
• Notice Provisions: Procedures for instructions, timing, and communication between parties
• Subordination Language: Bank's agreement to waive rights and follow lender's instructions
• Termination Terms: Conditions and process for ending the agreement
• Governing Law: Explicit reference to applicable Canadian provincial laws and PPSA provisions

A Control Agreement differs significantly from an Agency Agreement. While both involve delegating authority, they serve distinct purposes in Canadian business law. Control Agreements specifically focus on giving lenders rights over financial accounts, while Agency Agreements establish broader representation relationships.

• Purpose and Scope: Control Agreements are narrowly focused on account control rights for secured lending, while Agency Agreements cover general business representation and authority
• Party Structure: Control Agreements require three parties (lender, borrower, bank), whereas Agency Agreements typically involve just two (principal and agent)
• Legal Framework: Control Agreements operate under personal property security laws, while Agency Agreements fall under contract and agency law
• Duration: Control Agreements usually last until loan repayment, while Agency Agreements often have more flexible termination options