How to Fill Out a Security Agreement
- 1). Title the document. The title can be simple; "Security Agreement" centered and written in bold at the top of the page will suffice.
- 2). Demonstrate mutual consent. Legally enforceable contracts must be freely and voluntarily entered into. Demonstrate this by writing "On [DATE], [YOUR NAME], as creditor, and [DEBTOR'S NAME], as debtor, entered into this security agreement." No specific language is required.
- 3). Describe the nature of the transaction. In this section, set forth the terms of your agreement. Explain what you are giving to the debtor. Explain what the debtor is offering as far as collateral is concerned. Be sure to describe the collateral. If the collateral is your friend's brand-new LED HD TV, describe the brand, size, and location. Further, set forth the terms of the agreement (payment and penalties).
- 4). Describe any promises made between you and the debtor. For instance, you might require that the debtor must keep the item (like the car in the example in the overview) in the state; that is, the debtor cannot leave the state in your car unless the car is paid off. Write this and any other agreement in this section of the agreement.
- 5). Explain what constitutes a "default" of agreement. Finally, describe any condition that represents a default of agreement and explain the consequences of the default. For example, noncompliance with the agreement (driving the car out of state when the debtor promised not to) could be a default. Describe the nature of the default and any penalty (such as the amount of the loan being immediately due).
- 6). Sign and date the agreement.
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