Security Agreement Information
What Is A Security Agreement?
A security agreement is a contract between two parties in regard to some sort of collateral which has been provided from the lender to the borrower. The agreement provides details as to what the collateral is, and the security agreement is usually attached to a promissory note.
Where Can I Get A Security Agreement?
You can create your own personalized security agreement here.
Why Do You Need A Security Agreement?
To protect you legally. Either as the lender, or the borrower. You need to provide information about the collateral in case anything goes wrong with the transaction or agreement. Verbal contracts are not enough these days – they are too ambiguous. Having everything in writing within a security agreement is imperative to protect you.
This protects the collateral against any sort of issue, theft or damage and if the original promissory note is broken, outlines what must happen in regard to the collateral.
What Should Be Included In A Security Agreement?
It should obviously list both parties names and addresses. If there are multiple lenders or borrowers, be sure to detail that within the security contract too.
Give specific details as to what the collateral is. Also mention whether the collateral is insured, and if there is any sort of claims against the collateral. Outline all of this – “less is more” doesn’t apply here. Provide as much detail as possible.
List where the collateral will stay during the agreement. Whether it will be at the lenders address, the borrowers address, or a miscellaneous unbiased address and location.
Also list the amount borrowed on the security agreement, and if you are enclosing a copy of the promissory note, which is highly recommended, be sure to write that within the security agreement.
The agreement should state all of the obligations in regard to the collateral – for example that it remains personal property at all times, and that it will not be sold or disposed of during the process and until the completion date of the initial transaction.
It the borrower defaults, you need to outline all of that within the agreement and reasons as to how they could default or why they would default. Generally, if the debtor misrepresents anything within the agreement or even related to the agreement that would be classified as defaulting.
Security Agreement Templates:
Due to various state regulations, we highly recommend against finding any generic security agreement template online. Instead be sure to use our security agreement generator. It’s very easy to use, and will protect you and take you just minutes to actually create. We do all the hard work for you.
Sample Security Agreement:
To see a sample security agreement, please click here: Security Agreement Generator. At that point, you can click to preview the item and see a blank sample security agreement.