§ 28:9–314. Perfection by control.

(a) A security interest in investment property, deposit accounts, letter-of-credit rights, electronic chattel paper, or electronic documents may be perfected by control of the collateral under § 28:7-106, § 28:9-104, § 28:9-105, § 28:9-106, or § 28:9-107.

(b) A security interest in deposit accounts, electronic chattel paper, or letter-of-credit rights, or electronic documents is perfected by control under § 28:7-106, § 28:9-104, § 28:9-105, or § 28:9-107 when the secured party obtains control and remains perfected by control only while the secured party retains control.

(c) A security interest in investment property is perfected by control under § 28:9-106 from the time the secured party obtains control and remains perfected by control until:

(1) The secured party does not have control; and

(2) One of the following occurs:

(A) If the collateral is a certificated security, the debtor has or acquires possession of the security certificate;

(B) If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or

(Oct. 26, 2000, D.C. Law 13-201, § 101, 47 DCR 7576; Apr. 27, 2013, D.C. Law 19-299, § 11(k), 60 DCR 2634.)

Section References

This section is referenced in § 28:9-310, § 28:9-312, § 28:9-327, § 28:9-328, and § 28:9-329.

Effect of Amendments

The 2013 amendment by D.C. Law 19-299 rewrote (a) and (b).

Uniform Commercial Code Comment

1. Source. Substantially new; derived in part from former Section 9-115(4).

2. Control. This section provides for perfection by control with respect to investment property, deposit accounts, letter-of-credit rights, and electronic chattel paper. For explanations of how a secured party takes control of these types of collateral, see Sections 9-104 through 9-107. Subsection (b) explains when a security interest is perfected by control and how long a security interest remains perfected by control. Like Section 9-313(d) and for the same reasons, subsection (b) makes no reference to the doctrine of “relation back.” See Section 9-313, Comment 5.

3. Investment Property. Subsection (c) provides a special rule for investment property. Once a secured party has control, its security interest remains perfected by control until the secured party ceases to have control and the debtor receives possession of collateral that is a certificated security, becomes the registered owner of collateral that is an uncertificated security, or becomes the entitlement holder of collateral that is a security entitlement. The result is particularly important in the “repledge” context. See Section 9-207, Comment 5.

In a transaction in which a secured party who has control grants a security interest in investment property or sells outright the investment property, by virtue of the debtor’s consent or applicable legal rules, a purchaser from the secured party typically will cut off the debtor’s rights in the investment property or be immune from the debtor’s claims. See Section 9-207, Comments 5 and 6.

If the investment property is a security, the debtor normally would retain no interest in the security following the purchase from the secured party, and a claim of the debtor against the secured party for redemption ( Section 9-623) or otherwise with respect to the security would be a purely personal claim. If the investment property transferred by the secured party is a financial asset in which the debtor had a security entitlement credited to a securities account maintained with the secured party as a securities intermediary, the debtor’s claim against the secured party could arise as a part of its securities account notwithstanding its personal nature. (This claim would be analogous to a “credit balance” in the securities account, which is a component of the securities account even though it is a personal claim against the intermediary.) In the case in which the debtor may retain an interest in investment property notwithstanding a repledge or sale by the secured party, subsection (c) makes clear that the security interest will remain perfected by control.