Security Agreement Template

Security agreements are typically used when a loan is being arranged between a borrower and a lender. This contract creates a “security interest” between the borrower and a lender and it entitles the lender to take possession of collateral put up by the borrower if the borrower does not meet their loan payment obligations. This security agreement template can be used for any loan agreement that requires a security interest.

This Agreement is made on this [Document.CreatedDate] ​, between [Borrower.FirstName] [Borrower.LastName] residing at [Borrower.StreetAddress] , [Borrower.City] , [Borrower.State] [Borrower.PostalCode] , hereinafter referred to as “Debtor” and [Lender.FirstName] [Lender.LastName] residing at [Lender.StreetAddress] , [Lender.City] , [Lender.State] [Lender.PostalCode] , hereinafter referred to as “Secured Party.”

Loan Arrangement

The Debtor has agreed to borrow from the Lender an amount of $(amount) (the "Loan"). As a condition of the Lender's agreement to loan said amount to the Debtor, the Debtor is obliged to enter into this Security Agreement and to grant to the Lender a security interest in the Collateral (as hereinafter defined).

In connection with this loan arrangement, the Parties to this Agreement agree to the following terms and conditions:

1. Creation of Security Interest

The Secured Party shall be granted a security interest for the payment and performance of the Debtor’s promissory note in the principal amount of $(amount) and the payment and performance of all other obligations and liabilities of the Debtor to the Secured Party of every kind and description, absolute or contingent, direct or indirect, due or to become due now existing or hereafter arising.

Security agreements often are used in tandem with secured promissory notes, which are simply legally binding documents where the borrower agrees to repay a lender for a loan that’s being made.

1.1 Collateral

The Debtor also hereby grants to Secured Party a security interest in the Collateral as described:

(List the property being offered as collateral, e.g., vehicle, equipment, stocks, bonds, insurance policy, art, etc.)

This Collateral will secure the performance or payment of the Debtor's obligations to the Secured Party as defined herein. No loss or destruction of any item of the Collateral shall relieve the Debtor of any obligation under this Agreement.

Be specific when listing the collateral. For example, if the borrower’s vehicle acts as the collateral, list the make, model, color, and other relevant details.

1.2 Certain Rights of Secured Party

The Secured Party shall have the right, but not the obligation, to pay any levies or taxes on the Collateral or any costs to repair or to preserve the Collateral, which payment shall be made for the account of the Debtor and shall constitute a part of the obligations owed to the Secured Party and secured pursuant to this Agreement.

1.3 No Release

No injury to, or loss or destruction of, any part of the Collateral shall relieve the Debtor of any obligation under this Agreement.

2. Security Interest

The Debtor grants to the Secured Party a security interest in the Collateral as described herein, now or hereafter placed upon the premises located at:

(List the address or addresses where the collateral is kept)

If it’s real property located at a physical address, list the full address. If the collateral is financial assets, include bank numbers, brokerage account information, etc.

2.1 Title to Assets

As of the date herein, the Debtor acknowledges having good, valid, and marketable title to all of its properties and assets (whether real or personal), and there exists no lien, mortgage, security interest, covenant, reservation, restriction, or other encumbrance of any nature upon, or with respect to, the Debtor or any of its properties or assets, including, without limitation, the Collateral, except for liens of record and the security interests created by this Agreement or as otherwise acknowledged herein.

2.2 Taxes

The Debtor has filed all necessary tax returns and reports required by any governmental authority to be filed by the Debtor, and such returns and reports are true and correct. The Debtor has paid all taxes, assessments, and other government charges imposed upon it or its income, profits, or properties, or upon any part thereof, other than those presently payable without penalty or interest.

2.3 No Default

No event of default has occurred and is continuing as of the date hereof.

3. Warrants and Covenants of Debtor

The Debtor hereby warrants and covenants that:

The Debtor has and will have at all times the full right, power, and authority to grant a security interest in the Collateral to the Secured Party in the manner provided herein, free and clear of any lien, security interest, adverse claims or other charges or encumbrances.

The Debtor shall pay to the Secured Party the sum or sums evidenced by the promissory note or notes executed pursuant to this Agreement in accordance with the terms of the note or notes. The Collateral will not be taken from the Premises other than in the standard course of business. The Debtor will notify the Secured Party in writing of any change in the Debtor’s address immediately.

The Debtor will not dispose, sell, or otherwise transfer the Collateral or any interest therein without the prior written consent of the Secured Party, and the Debtor shall keep the Collateral free from unpaid taxes, liens, and charges.

The Debtor shall maintain insurance at all times with respect to all Collateral against risks of theft, fire, and other such risks, in such amounts as the Secured Party may require.

The Debtor shall make all replacements, repairs, additions, and improvements necessary to maintain any Collateral in good working order and condition.