Document background
The Collateral Assignment Agreement is a fundamental document in secured lending transactions under Canadian law, used when a party needs to grant a security interest in specific assets to secure an obligation. This agreement is particularly important in commercial lending, project finance, and asset-based lending transactions. It must comply with provincial Personal Property Security Act (PPSA) requirements and relevant federal legislation, making it distinct from similar agreements in other jurisdictions. The document typically includes detailed descriptions of the collateral, representations about ownership and condition of the assets, maintenance requirements, default provisions, and enforcement mechanisms. It's essential for protecting the assignee's interests while providing clear guidelines for the assignor's continued use of the collateral. The agreement becomes especially critical in the event of default or bankruptcy, as it establishes the assignee's rights to the collateral.
