GroundRules
Ark. Code Ann. § 4-56-105: Cross-collateralization clauses - Definition
Where this section sits in the code
- AR Code
- Title 4
- Chapter 56
(a) As used in this section, unless the context otherwise requires, "cross-collateralization clause" means a clause that by its terms grants a security interest established under a separate security agreement, instrument, mortgage, or deed of trust to secure debt or another obligation other than that for which it was specifically incurred, including without limitation a preexisting or subsequent debt or obligation. (b) A cross-collateralization clause that grants a security interest for a personal, family, household, or commercial purpose is valid and enforceable, whether or not the cross-collateralization clause is specific or general, lists or identifies existing debts or obligations, or secures debts incurred for the same purpose as the original debt. (c) A cross-collateralization clause is valid and enforceable if the cross-collateralization clause meets the requirements of this section. (d) A cross-collateralization clause in a security instrument that does not identify the preexisting debt, value, or obligation is not invalid if the cross-collateralization clause meets the requirements of this section. (e) (1) The failure to comply with this section shall render the cross-collateralization clause void. (2) A cross-collateralization clause that is void shall not affect or impair the validity of the security agreement, instrument, mortgage, or deed of trust. (f) This section applies to a security agreement, instrument, mortgage, or deed of trust executed on and after September 1, 2021. Added by Act 2021, No. 313,§ 1, eff. 7/28/2021.
(a) As used in this section, unless the context otherwise requires, "cross-collateralization clause" means a clause that by its terms grants a security interest established under a separate security agreement, instrument, mortgage, or deed of trust to secure debt or another obligation other than that for which it was specifically incurred, including without limitation a preexisting or subsequent debt or obligation.
(b) A cross-collateralization clause that grants a security interest for a personal, family, household, or commercial purpose is valid and enforceable, whether or not the cross-collateralization clause is specific or general, lists or identifies existing debts or obligations, or secures debts incurred for the same purpose as the original debt.
(c) A cross-collateralization clause is valid and enforceable if the cross-collateralization clause meets the requirements of this section.
(d) A cross-collateralization clause in a security instrument that does not identify the preexisting debt, value, or obligation is not invalid if the cross-collateralization clause meets the requirements of this section.
(e) (1) The failure to comply with this section shall render the cross-collateralization clause void. (2) A cross-collateralization clause that is void shall not affect or impair the validity of the security agreement, instrument, mortgage, or deed of trust.
(1) The failure to comply with this section shall render the cross-collateralization clause void.
(2) A cross-collateralization clause that is void shall not affect or impair the validity of the security agreement, instrument, mortgage, or deed of trust.
(f) This section applies to a security agreement, instrument, mortgage, or deed of trust executed on and after September 1, 2021.
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