Colorado Code
Part 3 - Perfection and Priority
§ 4-9-327. Priority of Security Interests in Deposit Account

The following rules govern priority among conflicting security interests in the same deposit account:




Source: L. 2001: Entire article R&RE, p. 1363, § 1, effective July 1.





Paragraph (2) governs the case (expected to be very rare) in which a bank enters into a Section 9-104(a)(2) control agreement with more than one secured party. It provides that the security interests rank according to time of obtaining control. If the bank is solvent and the control agreements are well drafted, the bank will be liable to each secured party, and the priority rule will have no practical effect.
A secured party who takes a security interest in the deposit account as original collateral can protect itself against the results of this rule in one of two ways. It can take control of the deposit account by becoming the bank's customer. Under paragraph (4), this arrangement operates to subordinate the bank's security interest. Alternatively, the secured party can obtain a subordination agreement from the bank. See Section 9-339.
A secured party who claims the deposit account as proceeds of other collateral can reduce the risk of becoming junior by obtaining the debtor's agreement to deposit proceeds into a specific cash-collateral account and obtaining the agreement of that bank to subordinate all its claims to those of the secured party. But if the debtor violates its agreement and deposits funds into a deposit account other than the cash-collateral account, the secured party risks being subordinated.

Structure Colorado Code

Colorado Code

Title 4 - Uniform Commercial Code

Article 9 - Secured Transactions

Part 3 - Perfection and Priority

§ 4-9-301. Law Governing Perfection and Priority of Security Interests

§ 4-9-302. Law Governing Perfection and Priority of Agricultural Liens

§ 4-9-303. Law Governing Perfection and Priority of Security Interests in Goods Covered by a Certificate of Title

§ 4-9-304. Law Governing Perfection and Priority of Security Interests in Deposit Accounts

§ 4-9-305. Law Governing Perfection and Priority of Security Interests in Investment Property

§ 4-9-306. Law Governing Perfection and Priority of Security Interests in Letter-of-Credit Rights

§ 4-9-307. Location of Debtor

§ 4-9-308. When Security Interest or Agricultural Lien Is Perfected - Continuity of Perfection

§ 4-9-309. Security Interest Perfected Upon Attachment

§ 4-9-310. When Filing Required to Perfect Security Interest or Agricultural Lien - Security Interests and Agricultural Liens to Which Filing Provisions Do Not Apply

§ 4-9-311. Perfection of Security Interests in Property Subject to Certain Statutes, Regulations, and Treaties

§ 4-9-312. Perfection of Security Interests in Chattel Paper, Deposit Accounts, Documents, Goods Covered by Documents, Instruments, Investment Property, Letter-of-Credit Rights, and Money - Perfection by Permissive Filing - Temporary Perfection Witho...

§ 4-9-313. When Possession by or Delivery to Secured Party Perfects Security Interest Without Filing

§ 4-9-314. Perfection by Control

§ 4-9-315. Secured Party's Rights on Disposition of Collateral and in Proceeds

§ 4-9-316. Effect of Change in Governing Law

§ 4-9-317. Interests That Take Priority Over or Take Free of Security Interest or Agricultural Lien

§ 4-9-318. No Interest Retained in Right to Payment That Is Sold - Rights and Title of Seller of Account or Chattel Paper With Respect to Creditors and Purchasers

§ 4-9-319. Rights and Title of Consignee With Respect to Creditors and Purchasers

§ 4-9-320. Buyer of Goods

§ 4-9-321. Licensee of General Intangible and Lessee of Goods in Ordinary Course of Business

§ 4-9-322. Priorities Among Conflicting Security Interests in and Agricultural Liens on Same Collateral

§ 4-9-323. Future Advances

§ 4-9-324. Priority of Purchase-Money Security Interests

§ 4-9-325. Priority of Security Interests in Transferred Collateral

§ 4-9-326. Priority of Security Interests Created by New Debtor

§ 4-9-327. Priority of Security Interests in Deposit Account

§ 4-9-328. Priority of Security Interests in Investment Property

§ 4-9-329. Priority of Security Interests in Letter-of-Credit Right

§ 4-9-330. Priority of Purchaser of Chattel Paper or Instrument

§ 4-9-331. Priority of Rights of Purchasers of Instruments, Documents, and Securities Under Other Articles - Priority of Interests in Financial Assets and Security Entitlements Under Article 8

§ 4-9-332. Transfer of Money - Transfer of Funds From Deposit Account

§ 4-9-333. Priority of Certain Liens Arising by Operation of Law

§ 4-9-334. Priority of Security Interests in Fixtures and Crops

§ 4-9-335. Accessions

§ 4-9-336. Commingled Goods

§ 4-9-337. Priority of Security Interests in Goods Covered by Certificate of Title

§ 4-9-338. Priority of Security Interest or Agricultural Lien Perfected by Filed Financing Statement Providing Certain Incorrect Information

§ 4-9-339. Priority Subject to Subordination

§ 4-9-340. Effectiveness of Right of Recoupment or Set-Off Against Deposit Account

§ 4-9-341. Bank's Rights and Duties With Respect to Deposit Account

§ 4-9-342. Bank's Right to Refuse to Enter Into or Disclose Existence of Control Agreement