Bank of New York Account Control Agreement: What You Need to Know
When it comes to financing your business, one of the most important steps is securing funding from a bank or other financial institution. However, in order to protect their investment, banks typically require businesses to sign an account control agreement. In this article, we will be discussing the Bank of New York Account Control Agreement and what you need to know about it.
What is an Account Control Agreement?
An account control agreement is a legal agreement between a borrower and a lender that gives the lender control over the borrower`s account. This is typically done to ensure that the lender is able to collect any outstanding debt owed to them in a timely manner. The agreement typically outlines the terms and conditions of the loan, as well as the rights and responsibilities of both the borrower and the lender.
The Bank of New York Account Control Agreement
The Bank of New York Account Control Agreement is a specific type of account control agreement that is used by The Bank of New York Mellon Corporation. The agreement is typically used in situations where the bank is providing financing for a commercial real estate transaction. The purpose of the agreement is to provide the bank with control over the borrower`s bank account, which is typically used to receive rent payments from tenants.
Under the Bank of New York Account Control Agreement, the borrower agrees to open and maintain a deposit account with the bank. The bank is given the right to withdraw funds from the account in order to satisfy any outstanding debt owed to them by the borrower. The borrower is also required to give the bank notice before closing the account or removing any funds from it.
Benefits of the Bank of New York Account Control Agreement
There are several benefits to signing a Bank of New York Account Control Agreement. First, it provides the lender with an additional level of security, which can help to lower the overall risk of the loan. Additionally, it can help to streamline the collection process, making it easier for the lender to collect any outstanding debt owed to them.
Conclusion
If you are considering financing a commercial real estate transaction through The Bank of New York Mellon Corporation, you will likely be required to sign a Bank of New York Account Control Agreement. While it may seem daunting, it is an important step in protecting the lender`s investment and ensuring that the loan is repaid in a timely manner. If you have any questions or concerns about the agreement, be sure to speak with your attorney or financial advisor.