A UCC-1 security agreement is a legal document that outlines the terms and conditions of a secured loan. It`s a contract between a lender and a borrower in which the borrower pledges collateral as security for the loan. UCC-1 stands for Uniform Commercial Code-1, which is a set of laws in the United States that govern commercial transactions.
An example of a UCC-1 security agreement can help you understand the document better. Let`s take the hypothetical case of John, who needs a loan to buy a new car. He approaches ABC Bank, which agrees to lend him the money. John agrees to pledge his car as collateral for the loan, and they sign a UCC-1 security agreement.
Here`s a simplified example of what the UCC-1 security agreement might look like:
This agreement is made between John Doe („Debtor”) and ABC Bank („Secured Party”).
The Debtor pledges the following collateral as security for the loan:
The loan amount is $20,000, and the interest rate is 5% per annum. The loan is due in 24 monthly installments of $881.57 each, starting one month from the date of this agreement. The Debtor agrees to make timely payments and follow all other terms of the loan agreement.
The Secured Party has a security interest in the collateral and all proceeds from the collateral. If the Debtor defaults on the loan, the Secured Party has the right to repossess the collateral and sell it to recover the outstanding balance of the loan.
Filing and Priority:
The Secured Party has the right to file a UCC-1 financing statement with the appropriate state agency to perfect its security interest. The Debtor agrees to cooperate with the Secured Party in doing so. The Secured Party`s security interest has priority over all other claims to the collateral, except for certain liens and taxes.
This agreement is governed by the laws of the state of [insert state].
This is a simplified example, and actual UCC-1 security agreements can be more detailed and complex, depending on the nature of the loan and the collateral. However, it gives you an idea of what a UCC-1 security agreement entails. If you`re borrowing money and pledging collateral, it`s important to understand the terms of the UCC-1 security agreement and seek legal advice if necessary.