“Security” means all accounts, personal papers, trade offences, copyrights, deposit accounts, documents, equipment, agricultural products, general intangible assets, property, instruments, inventories, investment property, letters of credit, letters of credit, letters of credit, licenses, patents, supporting obligations, trademarks and other guarantees, wherever located, in which a grantor now or subsequently has rights or interests, as well as the proceeds (including rights of shares), the proceeds of insurance and their products, as well as all books and records, customer lists, credit files, computer files, programs, printouts and other documents and records computerized in this context; provided that the guarantee excludes all excluded assets and is subject to the restrictions set out in Article II of this guarantee agreement. In practice, UCC`s safety interests are often not available to contractors or material suppliers. Customers are often unwilling to grant collateral for open account loans, and competition with other providers will likely discourage you from requiring them. However, don`t forget about security interests as a possibility, as they should be kept in your arsenal of credit management tools. You are often faced with marginal customers that you should refuse. A security can allow you to increase your sales by accepting customers you would otherwise reject. Ask the client what business or personal assets are available to ensure safety. It won`t hurt to ask this question to a customer you would otherwise refuse to sell to. It is possible to perfect a security right in furniture such as HVAC equipment and plumbing and electrical installations integrated into the debtor`s real estate. In general, furniture is property (materials) that are “associated with certain properties in such a way that an interest in real estate law arises in them”. [7] They could usually be removed without damaging the property and are a kind of hybrid between personal and real estate. If you sell such items to be installed on the debtor`s property, you may want to consider taking such a security right. The rules for perfecting a safety interest in playground equipment are somewhat complicated and beyond the scope of this discussion.
Businesses and people need money to manage and finance their operations. There are rarely cases where companies can finance themselves, which is why they turn to banks and other sources of investment for capital. Some lenders charge more than good word and interest payments. This is where safety features come into play. These are important documents created between the two parties at the time of the loan. The guarantee agreement sets out the various rights that the beneficiary will have in relation to the guarantee that applies in addition to any other rights that the lender may have under the law, such as.B. the rights contained in Section 9 of the Uniform Commercial Code, which have been accepted in one form or another by any state of the United States. The warranty agreement also deals with issues such as authorized sales or other transactions involving the warranty in the ordinary course of the grantor`s business and the communications that the concessionaire must give to the grantor when certain measures are taken. There are many forms that can be purchased from legal delivery and bank delivery companies, in addition to software that creates a security agreement based on the user`s specific inputs.
As mentioned earlier, a warranty contract cannot be considered valid if the collateral is not adequately described. In particular, descriptions of collateral should not be too broad or generic. A description that is too broad may include a general description or rely on the debtor`s “all assets”. Battles for the perfection and priority of individual security rights rarely arise between the secured creditor and the debtor. More likely, these battles will take place between different creditors over who has first priority over the debtor`s assets. To complete a security right, a creditor must ensure that it has properly informed the rest of the world that a security right in the asset is claimed. A purchase money hedging interest works best for a seller of durable goods that the buyer will hold on to for a long period of time. The seller of heavy machinery is a good example. A food supplier for a restaurant will not be as interested in a security on the purchase price, as the goods are quickly resold or lose value as they age. A building material supplier usually has the same problem. The wood delivered to a carpentry stable will soon be resold to the customer and integrated into the property. As a general rule, the builder will require the carpenter-subcontractor to transport the wood “free of privileges” and “free of any security”.
In your security agreement, you want the right to contact the debtor`s customer to receive direct payment. The security agreement set out in the Annexes contains these and other protection conditions. The bankruptcy puts an end to the race for the courthouse. [2] All creditors are prohibited from applying for liens or otherwise improving their situation once an application for insolvency has been filed. Once an application has been filed, general unsecured creditors will never be able to secure the amount owed to them by judgment or otherwise. However, the secured creditor`s lien on the assets survives bankruptcy. 7.3. Special Warranty Account. After the occurrence and during the continuation of a late payment or acceleration event, the administrative officer may require that all cash proceeds of the security be deposited in a special non-interest-bearing cash guarantee account with the managing agent and be held there as collateral for covered bonds. No grantor has control over such a cash guarantee account.
If no defect has occurred or persists, the administrative agent shall, from time to time, deposit the balances accumulated in this cash guarantee account in the grantor`s respective general operating account153 with the management agent. If a late payment or acceleration event has occurred and continues, the administrative officer (and will, at the request of the required lenders), may from time to time apply the balances accumulated in this cash guarantee account to the payment of the covered obligations, whether or not the covered obligations are then due. A security right in the playground equipment could be filed either at the central location or in the area (county) where the property is located. [15] In general, furniture is property (materials) that could be removed without damaging the property, and it is a kind of hybrid between personal property and real estate. Examples would be lighting fixtures or HVAC devices. You need to remember to check the county land records and the state capital to see if there are any previous privileges on schedules. Under the UCC, you can obtain security on almost any type of personal property. The most likely candidates are: Insolvency stops any legal action against the debtor. Often, when many sellers start legally pushing a debtor, bankruptcy ensues.
Each time you become “legal” against the debtor, you run the risk that bankruptcy will prevent you from obtaining security, or that all of the debtor`s assets have disappeared by the time the judgment is pronounced. Obtaining a hedging interest now avoids these two problems. As long as the debtor can successfully file for you without declaring bankruptcy 90 days after providing security, your security will survive bankruptcy, while other creditors may not be able to recover it. There will come a time when your customer will need you a lot. They may have exceeded their credit limit or be in default with the loan agreement. They may need additional materials to complete a project, and they cannot be paid for the project until it is completed. .