Pledge Agreement

Pledge Agreement: Create a Verified Pledge of Assets

A verified pledge agreement is a security arrangement in which a pledgor delivers an asset, such as goods, valuables or documents of title, to a pledgee as security for a debt or obligation. It sets out the secured obligation, the pledged asset, possession and care, insurance, the pledgor's rights, what counts as default and how the pledgee can enforce. Robot Lawyer drafts the agreement from your answers, for the law of the country or state you choose. On the Verified plan, a legal professional checks it before you sign.

CONTENTS

What Is a Pledge?

A pledge is one of the simplest forms of security. The asset is handed over to the lender, who holds it until the debt is repaid. If the borrower defaults, the lender can sell the asset to recover what is owed, returning any surplus.

When Do You Need One?

• Secured personal loans
  Lending against jewellery, art, collectibles or other valuables.
• Business finance
  Lending against stock, goods or documents of title.
• Supporting a guarantee or contract
  Security for performance of an obligation.

What's Included in Your Agreement?

• The parties
  The pledgor and the pledgee.
• The secured obligation
  The debt or obligation the pledge secures.
• The pledged asset
  A clear description, and when it is delivered.
• Care and insurance
  Who looks after and insures the asset.
• The pledgor's rights
  What rights the pledgor keeps during the pledge.
• Default and enforcement
  When the pledgee can sell the asset, and how proceeds are applied.
• Release
  Return of the asset when the obligation is met.

Pledges and Security (UK Only)

In England and Wales, a pledge requires actual or constructive delivery of possession to the pledgee. If the asset stays with an individual pledgor, the arrangement may instead be a bill of sale, which has strict formal requirements, or a charge. Security given by a company may need registering at Companies House within 21 days.

How It Works on Robot Lawyer

1. Answer the questions
   Tell us about the parties, the debt and the asset.
2. Generate your agreement
   We draft a complete pledge agreement.
3. Get it verified
   On the Verified plan, a qualified legal professional checks the agreement within 24 hours and makes amendments where needed. See how our documents are verified.
4. Sign and deliver
   Both parties sign, and the asset is delivered to the pledgee.

Pledge Agreement FAQs

What is the difference between a pledge and a mortgage?

In a pledge, the lender takes possession of the asset but not ownership. In a mortgage, ownership (or a legal interest) passes as security, and the borrower usually keeps possession.

Can the pledgee use the pledged asset?

Usually not, unless the agreement allows it. The pledgee must take reasonable care of it.

What happens when the debt is repaid?

The pledgee must return the asset to the pledgor, and the security ends.

Create a Verified Pledge Agreement

Secure a loan with a clear pledge. Related documents: Security Agreement, Loan Agreement, Intellectual Property Pledge Agreement and Personal Guarantee.