Equipment Security Agreement for Canada

Equipment Security Agreement Template for Canada

A Canadian Equipment Security Agreement is a legal document that creates a security interest in specified equipment in favor of a secured party (typically a lender or financier) to secure the repayment of a loan or performance of other obligations. The agreement must comply with the Personal Property Security Act (PPSA) of the relevant Canadian province or territory, establishing the secured party's rights to the equipment collateral, including rights of enforcement upon default. The document details the specific equipment covered, the secured obligations, maintenance requirements, insurance obligations, and the parties' respective rights and responsibilities.

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What is a Equipment Security Agreement?

The Equipment Security Agreement is commonly used in Canadian commercial financing transactions where equipment serves as collateral for a loan or other financial obligations. This document is essential when businesses seek to finance equipment purchases or use existing equipment as security for financing. It must comply with the relevant provincial Personal Property Security Act (PPSA) and other applicable Canadian federal and provincial laws. The agreement typically follows a financing or loan arrangement and creates the lender's security interest in specific equipment, detailing the parties' rights and obligations regarding the equipment's use, maintenance, and insurance. It also establishes the lender's enforcement rights in case of default. The document is particularly crucial for protecting the lender's interests while allowing the borrower to maintain possession and use of the equipment during the financing term.

What sections should be included in a Equipment Security Agreement?

1. Parties: Identification of the secured party (creditor) and debtor, including full legal names and addresses

2. Background: Context of the security agreement, referring to any underlying purchase/loan agreement and the intention to create a security interest

3. Definitions: Key terms used throughout the agreement, including 'Equipment', 'Obligations', 'Event of Default', etc.

4. Grant of Security Interest: The formal creation of the security interest in the equipment

5. Description of Collateral: General description of the equipment subject to the security interest

6. Secured Obligations: Description of the obligations being secured, including principal, interest, and other amounts

7. Representations and Warranties: Debtor's confirmations regarding ownership, condition of equipment, and authority to grant security

8. Covenants: Debtor's ongoing obligations regarding maintenance, insurance, and use of the equipment

9. Events of Default: Circumstances constituting default under the agreement

10. Remedies: Secured party's rights and remedies upon default

11. General Provisions: Standard clauses including notices, amendments, governing law, etc.

What sections are optional to include in a Equipment Security Agreement?

1. Additional Secured Parties: Required when multiple creditors are involved, establishing priorities and relationships

2. Guarantee Provisions: Include when there are guarantors securing the debtor's obligations

3. Purchase-Money Security Interest: Special provisions required when the security interest qualifies as a PMSI under PPSA

4. Cross-Collateralization: When the equipment secures obligations under other agreements

5. Subordination: Required when there are multiple security interests and priorities need to be established

6. Assignment: Detailed provisions for when/how the security interest can be assigned

7. Quebec Provisions: Special provisions required if equipment may be located in Quebec

What schedules should be included in a Equipment Security Agreement?

1. Equipment Schedule: Detailed description of equipment including serial numbers, locations, and specifications

2. Payment Schedule: If payments are part of the agreement, details of payment amounts and dates

3. Insurance Requirements: Specific insurance requirements for the equipment

4. Permitted Locations: List of locations where equipment may be kept or used

5. Form of PPSA Financing Statement: Draft financing statement for PPSA registration

6. Additional Security Documents: Forms of any additional required security documents

7. Existing Liens: Schedule of permitted existing liens or encumbrances on the equipment

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
Clauses
Relevant Industries

Manufacturing

Construction

Agriculture

Mining

Transportation

Healthcare

Technology

Renewable Energy

Heavy Industry

Telecommunications

Forestry

Oil & Gas

Food Processing

Retail

Warehousing & Logistics

Relevant Teams

Legal

Finance

Treasury

Risk Management

Operations

Procurement

Compliance

Asset Management

Credit

Commercial Lending

Equipment Management

Contract Administration

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Equipment Finance Manager

Commercial Lending Officer

Credit Risk Manager

Legal Counsel

Corporate Lawyer

Operations Manager

Asset Manager

Procurement Manager

Contract Administrator

Risk Management Officer

Compliance Officer

Equipment Manager

Fleet 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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