A cross collateralization cross default agreement is one where the borrower has secured more than one loan from a financial institution by keeping the security of multiple properties. The properties that have been provided as security to the financial institution are mutual security for the multiple loans availed by the borrower. When there is a default of any one of the loan by the borrower the financial institution has the right to secure the recovery of the defaulted loan from another property that was secured as collateral.
The contents of a cross collateralization cross default agreement include properties secured with the financial institution, details of loans availed from the financial institution, maturity dates of each loan, valuation of each property, percentage of margin available to bank on each property etc. The agreement is made on a legal stamp paper and signed by the borrower in agreement of all the terms and conditions that are specified in it along with date.
[Also Read: Cross-Collateralization Agreement]
Sample for Cross-collateralization Cross-default Agreement
A sample of the agreement can be downloaded from below.
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