Posted by: Lilia Giles at February 19 2018 22:28:58.
Late fees: Many borrowers frown at paying more than they already must for a loan. Adding late fees to the agreement’s wording can help in preventing potential overdue payments in the future. The wording can allow for the late fees being something the lender applies at his or her discretion.
There are a number of issues that need to be addressed in order for a lender to enforce its security, such as: The loan agreement must contain a right of enforcement (including detailed provisions regarding when and how a lender can enforce its security). Ideally the enforcement provisions should be tailored to reflect the nature of the secured asset. Then 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 in order 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 registered at Companies House and in the borrower’s company registers. If an individual or partnership provides security over chattels, the requirements of the rather arcane Bills of Sale Act (1878) must be complied with. In view of the complexity of taking security, you are advised to take legal advice to ensure that the proposed security is enforceable in the event of default in repayment.
A company is a party to this agreement they should ensure that the Loan Agreement is signed by two authorised signatories, either two directors or a director and a company secretary. Where a company only has a single director, that person may sign the agreement as the sole director.
The legal issues surrounding the taking of security are complex, and there are various legal forms that can be used, for example, a chattel mortgage (a mortgage over tangible and moveable property, such as plant and machinery or vehicles), fixed and floating charge, pledge, lien and assignment 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.