In secured loans, when a debtor gets loan or borrows money from a bank or loan firm, he pledges his property or investments with the creditor as security of the loan. In this process, the creditor and debtor sign a contract that includes the details of the security and the terms on which the creditor can either foreclose the property and sell it or return it to the debtor. This contract is known as the security agreement.
There are basically two types of loans including; secured loans and unsecured loans. Unsecured loans are mostly personal i.e. between friends, family members, and relatives whereas secured loans are mostly professional and happen between two companies or a bank and the borrower etc. a secured loan is in which the borrower gives something that belongs to him to the lender or creditor. This process is known as pledging and the belongings are known as collateral. The most common collateral for loans is real estate property or different types of investments i.e. bonds and shares. With the collateral, the creditor has the security that the debtor will return his debt safely and even if he can’t or won’t, the creditor has the right to sell his collateral and recover his debt.
On the other hand, an unsecured loan doesn’t have any kind of collateral. This way you can understand that security agreements are only signed in secured loans in which when a borrower gives his belongings to a creditor as security or insurance of the debt, he signs the security agreement with the creditor. According to this agreement, the creditor and debtor negotiate on the terms and add these clauses in the agreement. This agreement includes the details of the security or collateral that is given by the debtor to the creditor along with the terms and conditions on which the creditor has the right to either sell the collateral to recover his debt or return it to the debtor when he returns the entire loan amount.
Essential elements to include in the Security Agreement:
Name of the creditor with complete address along with his company name i.e. bank or loan firm
Name of the debtor with complete address
The date on which the security agreement is being signed by the creditor and debtor
Details of the security that is pledged by the debtor with the creditor i.e. real estate property, type of property, the market value of the property, and location or details of investment i.e. shares, bonds, stocks, or any other type of investment.
Details of the loan that is borrowed by the debtor
Terms and conditions of the agreement
Validation and expiration of the agreement
In certain situations, the creditor will have the right to foreclose the property or collateral and sell it to recover his debt
Duration in which the debtor is required to return his debt with details of monthly installments and the last balloon installment (if applicable)
Signature of both the creditor and debtor along with witnesses
Free Sample Security Agreement:
Here is a preview of This First Sample Security Agreement Template created using MS Word,
Source: udel.edu
Here is preview of another Sample Security Agreement Template created using MS Word,
Source: famguardian.org
Here is preview of another Sample Security Agreement Template created using MS Word,
Source: selegal.org
Here is preview of another Sample Security Agreement Template created using MS Word,
Source: columbia.edu
Here is preview of another Sample Security Agreement Template created using MS Word,
Source: portal.hud.gov
Here is preview of another Sample Security Agreement Template created using MS Word,
Source: findlegalforms.com
Here is preview of another Sample Security Agreement Template created using MS Word,
Source: crfonline.org
Here is preview of another Sample Security Agreement Template created using MS Word,
Source: mspb.ms.gov
Here is preview of another Sample Security Agreement Template in PDF Format,
Source: statewidetire.com
Here is preview of another Sample Security Agreement Template in PDF Format,
