Pledge of Personal Property as Collateral Security. When you are working with a customer who will be using personal property as collateral security on your property you will need this sample letter.
Just be sure to have them read over it carefully and sign off before continuing business.
Discussing the specifics and liabilities verbally is great.
But, in order for it to be final and hold up in court should any problems occur, you must have everything down on paper, along with the signature of both parties.
Use this detailed letter as is, or revise certain parts to fit your needs!
PLEDGE OF PERSONAL PROPERTY
FOR VALUE RECEIVED, the undersigned hereby deposits and pledges with _, [Pledgee] as collateral security to secure the payment of:
The following personal property [collateral] described as:
It is understood and agreed that:
1. Pledgee may assign or transfer said debt and the pledged collateral hereunder.
2. Pledgee shall have no liability for loss, destruction or casualty to the collateral unless caused by his own negligence.
3. The undersigned shall pay any and all insurance it elects to maintain on the pledged collateral and any personal property, excise or other tax or levy.
4. The undersigned warrants that it has good title to the pledged collateral, authority to pledge same and that it is free of any adverse lien, encumbrance or claim.
5. In the event of default of payment of the debt or breach of this pledge agreement, the Pledgee or holder shall have full rights to foreclose on the pledged collateral and exercise its rights as a secured party pursuant to Article 9 of the Uniform Commercial Code; said rights being cumulative with any other rights the Pledgee may have against the undersigned.
Signed under seal this ___ day of ________, 19__.