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Negative Pledge of Assets

Answered by: 

Question: 
How does one perfect a negative pledge of assets owned by a guarantor?
Answer: 

You have no claim to any collateral, so there's no security interest to perfect. An agreement can be drawn up to contract to the terms. But negative pledges are as worthless as campaign promises by politicians. Before you realize your borrowers/guarantors are in financial trouble, they will sell or mortgage the assets you thought you would get.

First published on BankersOnline.com 1/2/07

First published on 01/02/2007

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