What is a collateral agreement? This agreement will allow a lender — or the “Secured Party,” which can be an individual and/or their company — to take ownership of the property that was used as collateral. This property becomes an instrument the lender uses to recover a part or all of what the borrower was loaned. Collateral agreements are used in mortgages, personal or business loan agreements, and insurance policies, among others. You should only start filling out this contract once you’ve already set up a mortgage, personal loan, or insurance policy, for example, with your client.
This Agreement (“Agreement”) is made by [Sender.FirstName] [Sender.LastName] of [Sender.Company] (“Secured Party”) and [Client.FirstName] [Client.LastName] of [Client.Company] (“Debtor”) on the effective date of (date).
Every and all of the articles to this Agreement as well as any other contracts, agreements, or papers that must be completed and delivered in conjunction with the activities in this Agreement fall under the overarching framework term of "Collateral Agreements."
The Debtor hereby agrees to provide the Secured Party with full right and title of ownership to the following property as collateral to secure the debt listed in the “Debt” section of this agreement:
Use the text fields in this section to describe the debt related to the collateral agreement.
[Sender.Company] has issued an (insurance policy/loan/etc.), attached hereto, to Debtor, and the parties agree that this policy results in financial exposure to the Secured Party based on:
(List out the reasons why) (List out if there is an interest rate)Since this template is just a sample, feel free to change the above paragraph as needed and reference the existing insurance policy, loan documents, letters, insider knowledge, or loan agreement template. This section is meant to introduce the context of this agreement. For example, you may be writing this collateral agreement because you have issued an insurance policy to the debtor.
Use the text fields in this section to describe the collateral related to the collateral agreement. Be sure to be detailed when describing the collateral. For example, if a vehicle is being used as collateral, list the make, model, color, mileage, and VIN.
To secure this Agreement, the Debtor hereby agrees to provide the Secured Party with full right and title of ownership to the following property as collateral (the “Collateral”) to secure the debt listed in the “Debt” section of this Agreement:
(Property name, address)The collateral listed below is also offered by the Debtor in order to secure the following from the Secured Party:
(Describe the collateral)Unlimited templates & signatures for 19$/month
The Debtor represents and warrants that:
No other Creditor has the right to ownership of the listed Collateral that may interfere with the Secured Party’s ability to take and profit from the sale of said property in the event that the above-listed debts are not repaid.
They are the rightful legal owner of the listed Collateral.They agree to notify the Secured Party of any changes to their contact information or physical address.
They agree not to sell or transfer ownership of the property listed in this Collateral Agreement until their debt to the Secured Party has been fully resolved.
Should they default on the above-listed debt, the Secured Party shall have the right to seize the listed Collateral and resell it to recoup their lost investment.
They will be deemed to be in default if they:Fail, within (number) days of (time period) to reimburse the Secured Party as required by the (insurance policy).
Fail to provide additional required collateral as required.Become insolvent, bankrupt, or unable or unwilling to fulfill their obligations to the Secured Party.
The Secured Party represents and warrants that:
All warranties and representations in the ( original agreement, i.e. loan or insurance policy document) continue in full force and effect.
The only recipient of the (l oan/insurance policy/etc.) is the Debtor identified in this AgreementThe Secured Party will perform all of its duties and obligations and comply with all terms and conditions set out under ( original agreement, i.e. loan or insurance policy document) and this Collateral Agreement.
The Debtor gives and grants the Secured Party a security interest in all Collateral provided or delivered to the Secured Party and/or Secured Party’s company by or for the account of the Debtor at any time pursuant to this Agreement.
This Collateral Agreement hereunder will be governed by the state and federal laws of [Sender.State] , [Sender.Country] .
The Parties understand that this Agreement is governed by Article III of the Uniform Commercial Code (the “UCC”).
As a type of secured promissory note and security agreement, collateral agreements are governed by Article III of the Uniform Commercial Code (the “UCC”). Read through Article III with your lawyer to adjust or rewrite this agreement as needed.
This template’s Survivability clause specifies which provisions will remain in effect after termination, expiration, or other events such as investigation of the Collateral. This clause allows both parties to mutually agree to maintain the legality and enforceability of the Agreement.
If any provisions are deemed invalid or unenforceable, the rest of the Agreement will continue in full force and effect.
The representations and warranties contained within this Agreement will continue after the delivery and payment of the Collateral and shall remain in full force and effect, regardless of any investigation made on behalf of any of the Collateral or any person controlling any of them.
There is some overlap below, under “Terms,” with the items listed above under “Representations and Warranties.” Please adjust by deleting (or adding additional terms) as needed to customize your collateral agreement.
The Debtor warrants that:
No other Creditor has the right to ownership of the listed collateral that may interfere with the Secured Party’s ability to take and profit from the sale of said property if the above-listed debts are not repaid.
The Debtor warrants that they are the rightful legal owner of the listed collateral.The Debtor agrees to notify the Secured Party of any changes to their contact information or physical address.
The Debtor agrees not to sell or transfer ownership of the property listed in this collateral agreement until their debt to the Secured Party has been fully resolved.
Should the Debtor default on the above-listed debt, the Secured Party shall have the right to seize the listed collateral and resell it to recoup their lost investments.
Every piece of asset that the lender intends to award in a lien against underneath the terms of this agreement is owned by the lender with sound title, constitutional protections, and the capability to transfer them freely and is clear of any liabilities other than Authorized Liens. There are no additional deposit transactions held by the lender than those with the bank, those mentioned in the Perfection Certificate delivered to the bank in linkage with this transaction, or those for which the borrower has announced publicly to the bank and taken the appropriate steps to grant the bank a perfected security interest. Unless otherwise specified in the Perfection Certificate, no third party consignee (such as a storehouse) shall be in the custody of the Collateral.
Once both parties have completed and signed this template, you’ll both be able to download a PDF copy for your records.
None of the Collateral components may be kept anywhere other than the conditions specified in the Perfection Certificate or those allowed by Section (insert details). Every item in the inventory is free of physical flaws and is acceptable and valuable in all accordance with generally accepted accounting. With the exception of (a) non-exclusive licensing requirements provided to the clients in the conduct of trade, (b) over-the-counter operating system that is sold to the general public, and (c) material Proprietary Rights licensed to lender and mentioned on the Perfection Certificate, borrower is the rightful proprietor of the Copyrighted Works that it possesses or claims to own.
No portion of the intellectual property that the borrower owns or claims to own and that is relevant to the borrower's business has been found to be invalid or unenforceable, in whole or in part. Each patent that the borrower has or claims to own is valid and enforceable. To the extent of lender's knowledge, no allegation has already been brought that any portion of the Intellectual Property infringes on the interests of any third person, unless and until such allegation could not reasonably be anticipated to have a materially negative impact on lender's company, lender is not subject to, and is not obligated by, any Limited Permit, with the exception of what is stated on the Perfection Certificate.