A Security Agreement is a legal document that guarantees the Lender an interest in certain personal property if he or she is unable to repay the debt owed to the Lender. Security Agreements are used to help ensure that the loan is repaid. If you're the borrower, the lender gets that property if you don't make good on the loan. If you're the lender, you get the reassurance that you'll receive some compensation even if payments can't be made.
"Security" or "collateral" is personal property that's put on the line for the loan. This may be a vehicle, coin collection, painting or other property of value.
Note: If you want to guarantee a debt with real property you should make a Mortgage Deed or Deed of Trust. This Agreement gives you the option to define the collateral being offered as security to the secured person and the promises and obligations of the Borrower.
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