Chattel Security Agreement for India

Chattel Security Agreement Template for India

A Chattel Security Agreement under Indian law is a legal document that creates a security interest in movable property (chattels) in favor of a lender or secured party. The agreement is governed by Indian law, particularly the SARFAESI Act 2002, and establishes the lender's rights over specific movable assets as collateral for a loan or other financial obligation. The document details the secured assets, rights and obligations of parties, enforcement mechanisms, and complies with Indian registration and security interest requirements.

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What is a Chattel Security Agreement?

A Chattel Security Agreement is essential in secured lending transactions where movable property serves as collateral. This document, governed by Indian law, particularly the SARFAESI Act 2002 and related legislation, creates and perfects a security interest in favor of the lender over specified movable assets. The agreement is commonly used in asset-based lending, equipment financing, and working capital facilities where the borrower provides movable assets as security. It includes detailed descriptions of the secured assets, maintenance requirements, rights and obligations of parties, default provisions, and enforcement mechanisms. The document ensures compliance with Indian security interest registration requirements and provides lenders with enforceable rights over the collateral in case of default.

What sections should be included in a Chattel Security Agreement?

1. Parties: Identification of the secured party (lender) and the grantor (borrower) with full legal names and addresses

2. Background: Context of the security agreement, reference to any underlying loan or credit agreement, and purpose of the security

3. Definitions: Definitions of key terms used throughout the agreement, including 'Collateral', 'Security Interest', 'Event of Default', etc.

4. Grant of Security Interest: Clear statement creating and granting the security interest in the collateral

5. Description of Collateral: Detailed description of the secured assets/chattels including identification numbers, locations, and characteristics

6. Representations and Warranties: Grantor's declarations regarding ownership, condition, and status of collateral

7. Covenants: Ongoing obligations of the grantor regarding maintenance, insurance, and use of collateral

8. Events of Default: Circumstances constituting default and triggering enforcement rights

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

10. Notices: Process and requirements for giving notices under the agreement

11. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

12. Execution: Signature blocks and execution formalities

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

1. Further Assurance: Additional commitments to perfect the security interest, used when registration or additional documentation may be required

2. Power of Attorney: Appointment of secured party as attorney for specific purposes, included when direct control over collateral may be needed

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

4. Permitted Dealings: Rules for allowed usage or disposal of collateral, included when grantor needs specific usage rights

5. Priority Arrangements: Provisions regarding ranking of security interests, used when multiple security interests exist

6. Assignment and Transfer: Rights to assign or transfer the security interest, included when transferability is important

7. Security over Proceeds: Extension of security to proceeds of collateral, used when collateral may be sold or transformed

What schedules should be included in a Chattel Security Agreement?

1. Schedule 1 - Collateral Description: Detailed inventory and description of all secured chattels including serial numbers, locations, and specifications

2. Schedule 2 - Permitted Security Interests: List of pre-existing or permitted security interests over the collateral

3. Schedule 3 - Form of Notice: Template notices for various communications under the agreement

4. Schedule 4 - Insurance Requirements: Specific insurance requirements and minimum coverage levels

5. Schedule 5 - Locations: List of approved locations where collateral may be kept

6. Appendix A - Registration Requirements: Details of required registrations and filings

7. Appendix B - Condition Report: Initial condition report of the collateral at the time of 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

India

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant Industries

Banking & Financial Services

Manufacturing

Automotive

Agriculture

Construction

Transportation & Logistics

Industrial Equipment

Retail

Technology Hardware

Mining & Resources

Healthcare Equipment

Relevant Teams

Legal

Finance

Credit Risk

Compliance

Operations

Corporate Finance

Asset Management

Security Administration

Loan Administration

Relevant Roles

Legal Counsel

Finance Manager

Credit Risk Officer

Relationship Manager

Loan Officer

Security Trustee Officer

Compliance Officer

Asset Manager

Corporate Finance Manager

Chief Financial Officer

Legal Director

Credit Analysis Manager

Operations 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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