Security Documents
Security Documents
Security documents record the arrangements by which a lender or creditor takes security over assets to support repayment of a debt or performance of an obligation. They matter because the value of security is only as good as the paperwork and the steps taken to make it valid and enforceable.
This collection contains a small set of templates for documenting common security arrangements for companies and individuals, including an indemnity, a security agreement for an unsecured debt that is being secured against property, a debenture (typically with fixed and floating charges), and a chattel mortgage over specified moveable property.
These templates are drafted by experienced solicitors and written in plain English for UK use. All documents in this collection are compliant with the Companies Act 2006.
When Should You Use These Templates?
✅ You want to document a security arrangement supporting an existing or proposed loan or credit exposure
✅ A creditor is owed an unsecured debt and wants security over the debtor’s property (for example, to avoid immediate collection while protecting the creditor’s position)
✅ You need a debenture creating fixed and floating charges over all or substantially all of a company’s assets
✅ You need security over specified moveable property (for example plant, machinery or vehicles) using a chattel mortgage
✅ You need an indemnity obliging one party to compensate another for a particular loss
What Do These Templates Cover?
Indemnity Agreement obliges one party to compensate another for a particular loss suffered by that party.
Security Agreement can be used where one party owes an unsecured debt to a creditor and the creditor wishes to secure that debt against the debtor’s property, including where the debtor wants to prevent immediate collection of the debt.
Debenture acknowledges and contains the terms of a loan and is typically secured by charges over all or substantially all of the borrower’s property or assets, including relevant fixed and floating charges.
Chattel Mortgage creates a mortgage over specified moveable property of a company as security for a loan.
Secured Lending: What Are The Pitfalls?
Simply-Docs offers a limited range of secured templates. The legal issues surrounding taking security are complex and there are various legal forms that can be used, for example fixed and floating charges, pledges, liens and assignments by way of security. Security over shares is different again and can be achieved by way of a legal mortgage, an equitable mortgage or an equitable charge.
Key points that affect enforceability include:
- The loan agreement should dovetail with the proposed security arrangement and must contain a right of enforcement, including detailed provisions on when and how a lender can enforce its security. Ideally, enforcement provisions should be tailored to reflect the nature of the secured asset.
- The lender must formally demand repayment.
- There must be some agreement as to how the lender takes possession of the secured assets (or in some cases, ownership must pass for the security to be valid, for example in the case of a legal mortgage of shares).
- The loan agreement must contain a power of sale in relation to the secured assets.
- The security may be invalid unless properly perfected and registered at Companies House and/or on the relevant company or asset registers.
- If an individual or partnership provides security over chattels, the requirements of the Bills of Sale Act (1878) must be complied with.
❗ In view of the complexity of taking security, you are strongly advised to take legal advice to ensure that the proposed security is valid and enforceable in the event of default in repayment.
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