If the collateral is physically held by the borrower or if the collateral is immaterial (e.g. B a patent.  full of receivables or a certificate of claim), the guarantee contract must be in writing to comply with the Fraud Act. The security contract must be certified by the debtor, i.e. it must either bear the debtor`s signature or be marked electronically. It must contain an appropriate description of the security rights and use words that show the intention to create a guarantee right (the right to demand repayment of the loan by attachment of the guarantees). For the collateral contract to be valid, the borrower must normally have rights to the security rights at the time of performance of the contract. If a borrower mortgages as collateral a car belonging to a neighbor and the neighbor does not know and approve of this promise, the security agreement is ineffective. However, a guarantee agreement may specify that it includes after home ownership. If such a specification is included, a mortgage of “all cars owned by the borrower” would include the neighbor`s car if the borrower bought that car from the neighbor.
The existence of a guarantee agreement and a possible right of pledge on these guarantees could affect the borrower`s ability to obtain increased financing from other lenders. The property, which serves as collateral, is tied to the terms of the first lender, which would mean that securing another loan against the same land would lead to cross-protection. . . .