What is a Security Agreement?
"Security" or "collateral" is personal property that's put on the line for the loan. This may be a vehicle, coin collection, painting or other property of value.
Note: If you want to guarantee a debt with real property you should make a Mortgage Deed or Deed of Trust. This Agreement gives you the option to define the collateral being offered as security to the secured person and the promises and obligations of the Borrower.
When to use a Security Agreement:
- You're going to lend someone money, but want collateral.
- You need to borrow from a lender, and they've asked for security.
This AGREEMENT is made on this , between of , , , , hereinafter Debtor and of , , , hereinafter Secured Party.
|The Parties to this Agreement agree to the following:|
1. Creation of Security Interest
The Secured Party shall secure the payment and performance of Debtor's promissory note in the principal amount of and the payment and performance of all other liabilities and obligations of Debtor to Secured Party of every kind and description, direct or indirect, absolute or contingent, due or to become due now existing or hereafter arising.
In addition, Debtor hereby grants to Secured Party a security interest in the Collateral described in Paragraph 2 to secure the performance or payment of the Obligations of Debtor to Secured Party under Paragraph 4.
The Collateral of this Security Agreement is as follows:
3. Security Interest
Debtor grants to Secured Party a security interest in the Collateral as described in Paragraph 2 now or hereafter placed upon the premises located at , , , or used in connection therewith and in which Debtor now has or hereafter acquires any right and the proceeds wherefrom. Debtor also assigns to Secured Party a security interest in any other rights or interests in which Debtor now has or hereafter acquires.
4. Warrants and Covenants
Debtor hereby warrants and covenants that:
Debtor shall pay to Secured Party the sum or sums evidenced by the promissory note or notes executed pursuant to this Security Agreement in accordance with the terms of the note or notes. The collateral will not be removed from the Premises other than in the ordinary course of business. Debtor will immediately notify Secured Party in writing of any change in Debtor's address. The Debtor will not sell, dispose, or otherwise transfer the collateral or any interest therein without the prior written consent of Secured Party, and the Debtor shall keep the collateral free from unpaid charges, taxes, and liens. Debtor shall maintain insurance at all times with respect to all collateral against risks of fire, theft, and other such risks and in such amounts as Secured Party may require. The Debtor shall make all repairs, replacements, additions, and improvements necessary to maintain any Collateral in good working order and condition.
The Debtor shall be in default under this Agreement upon any non compliance with or non performance of the Debtor's obligations under this Agreement. Upon default and at any time thereafter, Secured Party may declare all obligations secured hereby immediately due and payable and shall have the remedies of a Secured Party under the law.
No waiver by Secured Party of any default shall operate as a waiver of any other default or of the same default on a future occasion.
Any notices required to be given under this Agreement by either party to the other may be effected by personal delivery in writing or by registered or certified mail, postage prepaid, return receipt requested. A notice shall be deemed communicated as of the time of delivery if personally delivered, or as of the time of mailing. The address of the Debtor for the purpose of receiving notice shall be , , . The address of the Secured Party for this purpose shall be , , . Either party may change its address for the purpose of receiving notice by giving the other party written notice of the change.
8. Governing Law
This Agreement shall be construed under and in accordance with the laws of and all obligations of the parties created under this Agreement are performable in .
9. Parties Bound
This Agreement shall be binding on and inure to the benefit of the parties to this Agreement and their respective heirs, executors, administrators, legal representatives, successors and assigns as permitted by this Agreement.
10. Legal Construction
In the event, any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability shall not affect any other provision. This Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in it.
11. Prior Agreements Superseded
This Agreement constitutes the sole and only agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this Agreement.
This Agreement may be amended by the parties only by a written agreement.
13. Attorney's Fees
If any action at law or in equity is brought to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorneys' fees in addition to any other relief to which that party may be entitled.
This Agreement shall be signed on behalf of by , its , and on behalf of by , its , and shall be effective as of the date first written above.
Security Agreement FAQs
How do you write a Security Agreement?
A Security Agreement is easy to create with Rocket Lawyer. To customize your agreement, you'll be asked a series of questions. Think about the following information before starting your document:
- What is the total principal amount of the debt in the original Agreement?
- What property is being offered as collateral in this Agreement?
- Where is the collateral kept?
- Which state's law will control the Agreement?
Does a Security Agreement have to be notarized?
No, a Security Agreement does not have to be notarized, but it is highly recommended.