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Purchase Money Security Agreement Template for India

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Key Requirements PROMPT example:

Purchase Money Security Agreement

"I need a Purchase Money Security Agreement under Indian law for financing industrial machinery worth ₹50 million, with quarterly payments over 5 years starting March 2025, and special provisions for maintenance and insurance of the equipment."

Document background
The Purchase Money Security Agreement is essential in secured financing transactions under Indian law where a lender provides funds for the purchase of specific property and maintains a security interest in that property. This document is commonly used in both commercial and industrial contexts where significant assets are being financed. It must comply with Indian secured transactions law, including the SARFAESI Act 2002, Registration Act 1908, and other relevant legislation. The agreement typically includes detailed descriptions of the collateral, payment terms, maintenance obligations, default provisions, and enforcement mechanisms. It's particularly important for protecting the lender's interests by ensuring they have priority rights in the financed property until the debt is fully satisfied. The document also serves as evidence of the security interest for registration purposes with relevant authorities in India.
Suggested Sections

1. Parties: Identification of the secured party (seller/lender) and debtor (buyer/borrower) with full legal names and addresses

2. Background: Context of the transaction, including the purchase and the intention to create a security interest

3. Definitions: Key terms used throughout the agreement, including 'Collateral', 'Purchase Price', 'Security Interest', etc.

4. Purchase Terms: Details of the purchase transaction, including purchase price, payment terms, and delivery arrangements

5. Grant of Security Interest: Express creation of the security interest in the collateral

6. Description of Collateral: Detailed description of the property subject to the security interest

7. Representations and Warranties: Statements by the debtor regarding ownership, right to grant security, condition of collateral, etc.

8. Covenants: Ongoing obligations of the debtor regarding maintenance, insurance, and use of the collateral

9. Events of Default: Circumstances constituting default under the agreement

10. Remedies: Rights and remedies of the secured party upon default

11. Perfection of Security Interest: Requirements and procedures for perfecting the security interest

12. Governing Law: Specification of Indian law as governing law and jurisdiction provisions

Optional Sections

1. Additional Collateral: Used when security interest extends beyond the purchased property

2. Guarantees: Include when there are third-party guarantors for the payment obligations

3. Insurance Requirements: Detailed insurance obligations when specific insurance coverage is required

4. Cross-Default Provisions: Include when default under other agreements should trigger default under this agreement

5. Assignment and Transfer: Include when either party needs right to assign or transfer their rights

6. Priority Arrangements: Used when there are multiple security interests or lenders involved

7. Environmental Provisions: Include for collateral that could have environmental implications

8. Tax Provisions: Include when specific tax considerations need to be addressed

Suggested Schedules

1. Schedule A - Collateral Description: Detailed technical description of the collateral including serial numbers, locations, etc.

2. Schedule B - Payment Schedule: Detailed payment terms including amounts, dates, and method of payment

3. Schedule C - Insurance Requirements: Specific insurance requirements including types, amounts, and named insureds

4. Schedule D - Permitted Locations: List of locations where collateral may be kept or used

5. Schedule E - Prior Security Interests: List of any pre-existing security interests or liens on the collateral

6. Appendix 1 - Registration Forms: Forms required for registration of the security interest

7. Appendix 2 - Maintenance Requirements: Detailed maintenance and upkeep requirements for the collateral

8. Appendix 3 - Valuation Report: Independent valuation of the collateral if required

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions







































Clauses































Relevant Industries

Banking and Financial Services

Manufacturing

Automotive

Heavy Equipment

Industrial Machinery

Agriculture

Construction

Technology and IT

Real Estate

Infrastructure

Retail

Transportation and Logistics

Relevant Teams

Legal

Finance

Risk Management

Procurement

Treasury

Compliance

Commercial Operations

Credit Administration

Asset Management

Corporate Finance

Business Development

Relevant Roles

Chief Financial Officer

Finance Manager

Legal Counsel

Contract Manager

Risk Manager

Credit Manager

Commercial Director

Procurement Manager

Asset Manager

Treasury Manager

Compliance Officer

Security Documentation Specialist

Corporate Finance Manager

Business Development Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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