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Securing of a Loan: Agreement for the Assignment of Claims

Key points and template

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Key Points included in This Agreement for the Assignment of Claims

Scope of the assignment and warranties regarding the claims
Duties and measures to maintain the value of the assigned claims
Modalities of notification of the assigned debtors
Conditions of enforcement of the claims and return of property

Use This Agreement for the Assignment of Claims if …

… you have granted a loan and the borrower assigns claims to you as security for repayment

… you have taken out a loan and must assign claims to the lender to secure the repayment

What is an Agreement for the Assignment of Claims?

Under this agreement regarding the assignment of claims, a borrower assigns claims to a lender to secure a loan. The assigned claims are used as collateral until full repayment.

The parties can choose to assign certain defined claims (for instance, claims against insurance companies) or all of the lender’s current and future claims.

If the borrower is in default for payments under the loan (for instance, it has failed to pay the interest when due), the lender may enforce the claims against the assigned debtors and request that all payments be made to them until it has received the loan amount and interest due. The assigned claims thus allow the lender to recover (at least part of) its losses and serve to mitigate the credit risk of the borrower.