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The essence of a security agreement is the description of the collateral covered by the security interest. Collateral is an asset pledged as a security guarantee for a financial transaction such as the extension of credit. In the event of default, the secured creditor may obtain title to the assets. The security
agreement should include a written description of the collateral and should
state that the security interest attaches to all similar types of collateral
owned or subsequently acquired by the debtor, as well as any proceeds
(such as accounts receivable and cash) generated by the sale of the collateral.
If the collateral is listed in an attachment to the agreement, the attachment
should be referenced in the body of the agreement. Edited by Michael Dennis, author of "Credit and Collection Handbook" available at the NACM Bookstore. |
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