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UCC Issues in Mezzanine and Mortgage Loans: Equity Interests and Deposit Accounts as Collateral

Documenting and Perfecting Security Interests Under Articles 8 and 9

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Thursday, January 4, 2018

Recorded event now available

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This CLE course will prepare real estate finance counsel to resolve UCC issues that arise in mezzanine and mortgage loans when LLC equity interests and deposit accounts are part of the collateral. The panel will discuss Article 8 requirements for the perfection of equity collateral and Article 9 rules for perfecting interests in deposit accounts. The program will outline best practices for drafting pledge agreements for equity collateral and deposit account control agreements.


Partnership and LLC equity interests are the cornerstone of real estate mezzanine finance. The pledge agreement documents the security interest in the equity of the entity. Representations, warranties and covenants of pledge agreements are often different than standard provisions in a security agreement for business assets.

The borrower’s operating agreement should contain the Article 8 opt-in and other key provisions. These may include special preconditions to a voluntary bankruptcy filing and prohibition of disposal of business assets without the lender’s consent.

Real estate loans require cash management lock-boxes giving the lender control over cash flow from the property. For the security interest to be perfected and to achieve the desired priority, the lender usually will typically want to obtain “control” over these lock-box accounts. Lenders need to consider the potential pitfalls in deposit account control agreements and steps to protect their interests.

Listen as our authoritative panel of real estate finance attorneys discusses UCC Article 8 requirements for equity interests in partnerships and LLCs and Article 9 rules for perfecting interests in the mortgagor’s deposit accounts. The panel will outline best practices for drafting pledge agreements for equity collateral and deposit account control agreements.



  1. Perfecting security interests in partnership and LLC interests
    1. Overview of UCC Article 8 requirements
    2. Drafting the pledge agreement
    3. Amendments to the borrower’s operating agreements
    4. Common pitfalls and strategies to best protect the lender
  2. Perfecting security interests in deposit accounts
    1. Importance of control
    2. Key provisions of control agreement
    3. Secured party’s concerns
    4. Depositary bank’s concerns
    5. Borrower’s concerns


The panel will review these and other key issues:

  • What challenges arise when borrowers seek to use equity interests as collateral for mezzanine loans?
  • What steps should lenders’ counsel take to avoid common pitfalls in creating and perfecting security interests in partnership and LLC interests?
  • How does the lender obtain control over the borrower’s deposit account—and why is control critical?
  • What circumstances make perfection by control preferable and when is control necessary for perfection of a security interest in a deposit account?


Barksdale, David
David A. Barksdale

Ballard Spahr

Mr. Barksdale focuses his practice on transactional finance, including structured and syndicated finance, and...  |  Read More

Clark, Brooks
Brooks S. Clark


Mr. Clark focuses his practice on commercial lending, real estate and structured finance, leveraged leasing, building...  |  Read More

Dickey, Allen
Allen J. Dickey


Mr. Dickey practices in all aspects of real estate finance, securitization, acquisition, leasing and development. He...  |  Read More

Dowd, Grant
Grant Dowd, Esq.

Ballard Spahr

Mr. Dowd concentrates his practice on real estate finance and investment transactions. He regularly represents...  |  Read More

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