Legal Question in Credit and Debt Law in California
security agreement, payment default
my LLC entered into a security agreement with a Nevada corporation. The agreement specifies that the principle and interest of the loan is due on or before May 31. The collateral is real estate property located in an asian country. The agreement is signed by the CEO of the nevada corporation(notarized signatures). No payments have been received as of June 4.
Furthermore, the agreement includes the following:
''1. DEBTOR owns the collateral and it is free from any other lien, encumbrance and security interest and the DEBTOR has full authority to grant this security interest.
2. Debtor will borrow a total loan amount of up to $X Dollars from one or many lenders and that the loan amount represented by this agreement is secured proportionally to the amount loaned to debtor by the amount offered as COLLATERAL.
3. Upon default in payment or performance of any obligation for which this security interest is granted, SECURED PARTY may declare all obligations immediately due and payable and shall have all remedies of a SECURED PARTY under the Uniform Commercial Code''''
- the nevada corporation told us that they plan to fight the agreement legally. How are their chances to win?
- What are our options?
2 Answers from Attorneys
Re: security agreement, payment default
It require more than an agreement to enforce a security lien against real property. Ordinarily, one has a second or first or third, trust deed which is recorded and gives notice to the world that there exists a security interest on the real property. Depending on the country in which the property is situated, the appropriate action must be taken. I don't believe that you are already damaged in your position, but it is important that you do what you can to comply with the requirement to record notice, which may be difficult, now that you and the debtor are in such an adversary position. You should have had an attorney handle the original transaction, but I am sure you realize that now!
Re: security agreement, payment default
from the facts and the excerpts you have given so far, you DEFINITELY have a strong cause of action for breach of contract. this other corporation does not have "a valid defense" to fight you on based on the limited information you have submitted thus far. thus, its probably in your best interest right now to retain an attorney to negotiate with the other side regarding this contract, or immediately sue for damages and/or specific performance of the contract, based on the specific remedies you find optimal under the circumstances. if you would like further asistance and/or legal representation in this matter, feel free to contact me directly with more detailed facts as well as what remedies you find most favorable to your business in this situation. we can proceed from there.
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