Question

What is required in a security agreement?

Answer 1

In the event of granting the loan by the lender to the borrower, the lender obtains a security agreement from the borrower or guarantor. Security agreement is a kind of contract between the lender and borrower ( usually a guarantor or surety) to obtain a security interest on collateral property by the lender.

A security agreement is governed by the law of the United States. The purpose of security agreement is to secure the financial transaction between the lender and borrower.

Requirements of security agreement -

1. Security agreement may be oral if the physical possession of the collateral is with the lender. Otherwise, it is always advisable to have written security agreement.

2. A clear detailed description of the collateral should be stated.

3. A security agreement should clearly state the security interest.

4. Signing the security agreement electronically or physically.

5. Notary of security agreement to assist in the event of legal dispute.

6. Delivery of agreement to both the parties.