Third Party Security Agreement for Canada

Third Party Security Agreement Template for Canada

A Canadian Third Party Security Agreement is a crucial legal document used in secured financing transactions where a party (the security provider) grants a security interest over its assets to secure the obligations of another party (the primary debtor). This agreement is governed by Canadian federal laws and provincial legislation, particularly the Personal Property Security Act (PPSA) of the relevant province or territory. The document establishes the terms of the security interest, including the nature and scope of the collateral, the secured obligations, enforcement rights, and the parties' respective obligations. It incorporates specific Canadian legal requirements for creation, perfection, and enforcement of security interests.

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What is a Third Party Security Agreement?

The Third Party Security Agreement is essential in Canadian commercial financing arrangements where one party provides security for another's obligations. This document is commonly used in corporate group structures, family business arrangements, or when a parent company secures a subsidiary's debt. The agreement must comply with Canadian federal laws and provincial PPSA requirements, which vary by jurisdiction. It typically includes detailed provisions regarding the creation and perfection of security interests, representations and warranties, covenants, enforcement rights, and remedies. The document becomes particularly important in scenarios involving cross-corporate guarantees, project financing, or syndicated lending arrangements. Special considerations are needed for Quebec-based transactions due to the Civil Code's distinct approach to security interests.

What sections should be included in a Third Party Security Agreement?

1. Parties: Identification of the Security Provider (Grantor), the Secured Party, and the Primary Debtor (whose obligations are being secured)

2. Background: Context of the security agreement, relationship between parties, and reference to primary obligations being secured

3. Definitions and Interpretation: Key terms used in the agreement, including defined terms from the primary agreement and PPSA definitions

4. Grant of Security Interest: Core provision creating the security interest over the collateral

5. Secured Obligations: Definition and scope of the obligations being secured

6. Representations and Warranties: Security provider's confirmations regarding ownership, authority, and status of collateral

7. Covenants: Ongoing obligations of the security provider regarding maintenance and protection of collateral

8. Further Assurances: Obligation to execute additional documents and take actions to perfect security

9. Events of Default: Circumstances triggering enforcement rights

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

11. Application of Proceeds: Order of distribution of enforcement proceeds

12. General Provisions: Standard boilerplate including notices, amendments, governing law, etc.

What sections are optional to include in a Third Party Security Agreement?

1. Intercreditor Provisions: Required when multiple secured parties have interests in the same collateral

2. Control Agreements: Needed for financial assets, investment property, or deposit accounts

3. Insurance: Detailed insurance requirements when collateral includes insurable assets

4. Special Rights for Specific Collateral: Additional provisions for intellectual property, accounts, or other special categories of collateral

5. Quebec Security Provisions: Required when collateral is located in Quebec or security provider is Quebec-based

6. PPSA Registration: Specific provisions regarding PPSA registrations and maintenance

7. Power of Attorney: Optional provision granting secured party power to execute documents

What schedules should be included in a Third Party Security Agreement?

1. Schedule A - Collateral Description: Detailed description of all assets subject to the security interest

2. Schedule B - Permitted Liens: List of pre-existing or permitted encumbrances on the collateral

3. Schedule C - Locations of Collateral: List of all locations where collateral is stored or maintained

4. Schedule D - Intellectual Property: Details of any intellectual property included in the collateral

5. Schedule E - Legal Description of Real Property: Required if security interest extends to fixtures or real property

6. Schedule F - Form of PPSA Financing Statement: Template or copy of PPSA registration form

7. Schedule G - Secured Party Notice Details: Contact information for notices under the agreement

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
Relevant Industries

Banking and Financial Services

Commercial Real Estate

Manufacturing

Retail

Technology

Agriculture

Energy and Resources

Healthcare

Construction

Transportation and Logistics

Professional Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretariat

Credit

Commercial Operations

Banking Relations

Relevant Roles

Chief Financial Officer

Corporate Counsel

Legal Director

Finance Director

Treasury Manager

Risk Manager

Commercial Director

Credit Manager

Compliance Officer

Security Trustee

Corporate Secretary

Banking Relationship Manager

Finance Manager

Legal Counsel

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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