Security Agreement

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DEFINITION of 'Security Agreement'

A document that provides a lender a security interest in a specified asset or property that is pledged as collateral. In the event that the borrower defaults, the pledged collateral can be seized and sold. A security agreement mitigates the default risk the lender faces.

INVESTOPEDIA EXPLAINS 'Security Agreement'

Security agreements often contain covenants that outline provisions for the advancement of funds, a repayment schedule or insurance requirements. The borrower may also allow the lender to hold the collateral for the loan until repayment. Security agreements may also pertain to intangible property, such as patents or receivables.

RELATED TERMS
  1. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  2. Covenant

    A promise in an indenture, or any other formal debt agreement, ...
  3. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  4. Default Risk

    The event in which companies or individuals will be unable to ...
  5. Security Deposit

    A monetary deposit given to a lender, seller or landlord as proof ...
  6. Commercial Real Estate Loan

    definition of a commercial real estate loan
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