- 1). Identify the collateral source for the security agreement. In the security agreement, include the collateral, such as a vehicle or house or cash asset. Include a statement asserting ownership of same.
- 2). Estimate the value of the collateral for the security agreement. Either include an appraisal or statement of value to attach to the security agreement. For tangible assets, such as real property, hire an appraiser to render an appraisal. For intangible assets, have your bank or investment consultant write a statement of value.
- 3). Record a lien against the real property collateral. Have the lender record a lien, sometimes called a charging lien, against the loan collateral. For intangible assets, place the funds in an escrow account.
- 4). Execute the security agreement. With the collateral in place, have the lender review the loan documents with the borrower. Sign the security agreement and make copies for both parties. Include the security agreement with the loan documents.
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