Real estate that can be declared as collateral under a security agreement includes inventory of products, furniture, equipment used by a company, home furnishings and real estate owned by the company. The borrower is responsible for maintaining security in good condition in the event of a default. The property classified as collateral should not be removed from the premises unless the property is required in the normal framework of operations. A security agreement may be oral if the guaranteed party (the lender) is in possession of the guarantees. If the guarantee is physically held by the borrower or if the guarantee is an intangible value (. For example, a patent, [1) of claims or a debt title), the guarantee agreement must be made in writing to comply with the fraud law. The security contract must be authenticated by the debtor, i.e. it must bear the debtor`s signature or be marked electronically. It must provide an appropriate description of the guarantees and use words that show an intention to create an interest in securities (the right to claim repayment of the loan through stolen property). In order for the security contract to be valid, the borrower must normally have rights to the guarantees at the time the contract is implemented.

If a borrower promises as collateral a car owned by a neighbour and the neighbour does not know or support this promise, the security agreement is ineffective. However, a security agreement may specify that it contains post-acquired properties. If such a specification is included, then a promise of « all cars in the borrower`s possession » would include the neighbor`s car if the borrower were to buy that car from the neighbor. Businesses and people need money to manage and finance their business. There are few cases where companies can self-finance, which is why they go to banks and other sources of capital investment. Some lenders demand more than good payments of words and interest. That is where security agreements come in. These are important documents between the two parties at the time of the loan. A security agreement refers to a document that gives a lender a security interest in a particular asset or property, which is mortgaged as collateral. The terms and conditions are set at the time of writing of the security contract. Security agreements are a necessary part of the business world, as lenders would never increase credit to certain businesses without them.

If the borrower is late in payment, the mortgaged guarantees can be seized and sold by the lender. Security agreements often contain agreements that include provisions for fund development, a repayment plan or insurance requirements. The borrower may also authorize the lender to keep the loan guarantees until repayment. Security agreements may also cover intangible assets such as patents or claims. The security agreement defines the different rights that the donor will have with respect to guarantees that, in addition to all other rights that the lender may have by law, such as the rights of Article 9 of the Single Code of Commerce, which has been adopted in one way or another by each state in the United States.