Other undertakings concerning the collateral

An undertaking is a promise by a party to another party to do or not to do certain things.

In a security agreement, a secured party will generally require a grantor to promise not to deal with the collateral, unless:

• • the grantor has the secured party’s prior written consent; or
• • the dealing is expressly permitted by the relevant loan or facility agreement or by another finance or transaction document.

It is common for a security agreement (whether a GSA or a SSA) to contain a number of other undertakings concerning the collateral. This guidance note provides examples of these undertakings, and explain what they mean. A focus is placed on undertakings regarding maintaining the collateral, which is usually driven by the secured party who will want the collateral maintained by the grantor in a manner that reasonably preserves the secured party’s interests in the property.

See Other undertakings concerning the collateral.