Security Trust Agreement Definition
The flexibility of the provisions that can be incorporated into the trust deeds allows, among other things, to modify the trustee of the trust without impairing the validity of the trust or its continuity, and the agent is entitled to claim the guarantee even if other creditors directly sue the debtor. It is important that security agents are not held liable for the obligations of other creditors unless a concrete agreement is reached between the parties. The existence of a guarantee agreement and a possible guarantee on these guarantees could jeopardize the borrower`s ability to obtain more financing from other lenders. Collateral-finished assets are subject to the conditions of the first lender, which would mean that the guarantee of an additional loan on the same land would result in cross-protection. 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. Certain conditions must be met, when the notes are listed and the agent acts as an intermediary between the issuer and the bondholder, this information must be included in the listing prospectus, for example. B: A security agreement reduces the lender`s risk of default. 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. In order for a security interest to be attached to the security held by subsequent buyers, it must be perfected. If the security contract for a security purchase is of interest to consumer products, perfection is automatic.
Otherwise, the lender must register either the agreement itself or a UCC-1 funding declaration in an appropriate public place (usually the Secretary of State or a public enterprise commission under that person`s control). The enhancement of interest creates constructive communication, considered legally sufficient to inform the rest of the world of the lender`s rights over guarantees. When a borrower has used the same property as the guarantees for several guarantee agreements with different lenders, the first lender to register the interest is most entitled to that property. Under Dutch (Dutch) law, the Dutch civil code designates the guarantee as an agreement by which a third party undertakes a contractual creditor to comply with a debtor`s contractual obligations.