Cross Collateral Agreement for Canada

Cross Collateral Agreement Template for Canada

A Cross Collateral Agreement is a sophisticated security arrangement document used in Canadian jurisdictions to establish that multiple assets or properties serve as collateral for multiple loans or obligations. The agreement operates under provincial Personal Property Security Act (PPSA) legislation (or the Civil Code in Quebec) and federal banking laws, creating a comprehensive security structure where all secured assets cross-secure all obligations. This document is crucial for lenders seeking to maximize their security position and for borrowers looking to optimize their borrowing capacity by leveraging multiple assets across different credit facilities.

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What is a Cross Collateral Agreement?

Cross Collateral Agreements are essential instruments in Canadian secured lending practices, used when parties wish to create a comprehensive security arrangement involving multiple assets and obligations. This document type is particularly valuable when a borrower has multiple credit facilities with the same lender(s) and various assets to offer as security. The agreement ensures that each piece of collateral secures not just its associated loan but all obligations owed to the lender(s). Operating under provincial PPSA legislation (except in Quebec, where the Civil Code applies) and federal banking laws, these agreements are commonly used in commercial lending, real estate financing, and general corporate borrowing scenarios. The document typically includes detailed descriptions of all relevant obligations and collateral, PPSA registration requirements, enforcement mechanisms, and the specific rights and obligations of all parties involved.

What sections should be included in a Cross Collateral Agreement?

1. Parties: Identification of all parties to the agreement, including creditor(s) and debtor(s)

2. Background: Context of the agreement, including reference to existing credit facilities and security arrangements

3. Definitions: Definitions of key terms, including 'Obligations', 'Collateral', 'Security Interest', and other relevant terms

4. Cross-Collateralization: Core provision establishing that all collateral secures all obligations

5. Grant of Security Interest: Formal grant of security interest in all collateral

6. Description of Secured Obligations: Detailed description of all obligations secured by the collateral

7. Representations and Warranties: Debtor's representations regarding ownership and right to grant security interest in collateral

8. Covenants: Ongoing obligations of the debtor regarding maintenance and protection of collateral

9. Default Events: Definition of events constituting default under the agreement

10. Enforcement Rights: Creditor's rights and remedies upon default

11. General Provisions: Standard provisions including governing law, notices, amendments, and severability

What sections are optional to include in a Cross Collateral Agreement?

1. Additional Obligors: Used when there are guarantors or additional parties providing security

2. Priority Arrangements: Include when there are multiple creditors requiring priority arrangements

3. Insurance Requirements: Detailed insurance requirements when specific collateral requires insurance coverage

4. Special Asset Provisions: Include when certain collateral requires special handling or maintenance

5. Inter-Creditor Provisions: Used when multiple creditors are involved requiring coordination of enforcement rights

6. PPSA Registration: Specific provisions regarding PPSA registration when registration requirements are complex

7. Quebec Security: Special provisions for Quebec assets subject to the Civil Code

What schedules should be included in a Cross Collateral Agreement?

1. Schedule A - Existing Credit Facilities: List and details of all existing credit facilities covered by the agreement

2. Schedule B - Collateral Description: Detailed description of all collateral subject to cross-collateralization

3. Schedule C - Permitted Liens: List of existing liens or encumbrances permitted under the agreement

4. Schedule D - Property Locations: List of locations where collateral is kept or registered

5. Schedule E - Intellectual Property: Details of any intellectual property included as collateral

6. Appendix 1 - Form of PPSA Financing Statement: Template or copy of PPSA financing statement

7. Appendix 2 - Security Registration Details: Details of all security registrations affecting the collateral

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking & Financial Services

Commercial Real Estate

Manufacturing

Retail

Agriculture

Technology

Construction

Transportation & Logistics

Healthcare

Energy & Resources

Relevant Teams

Legal

Finance

Treasury

Credit Risk

Commercial Banking

Loan Administration

Security Administration

Corporate Banking

Risk Management

Compliance

Relevant Roles

Chief Financial Officer

Treasury Manager

Commercial Lending Officer

Credit Risk Manager

Legal Counsel

Loan Officer

Collateral Manager

Security Registration Specialist

Corporate Banking Manager

Risk Assessment Officer

Commercial Banking Director

Credit Administration Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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