CLFP Exam- Leasing Law & Documentation QUESTIONS AND CORRECT
DETAILED ANSWERS WITH RATIONALES|A GRADED
'After acquired' clauses - ANSa clause that may appear in contracts, in which a lender
takes a security interest in 'all property that the debtor acquires after consummation of
the loan agreement'. Essentially, such a clause is intended to extend the protection of
the creditor to include assets that the debtor purchases or otherwise acquires after the
loan or debt is incurred.
'Cross default' Agreements - ANSthis agreement provides that if one creditor/lessor has
multiple agreements with debtor/lessee, if one goes into default, they all become in
default
Acceleration Clause - ANSa term that fully matures the performance due from a party
upon a breach of the contract
Additional Collateral - ANSExtra collateral pledged to the successful completion of a
secured loan beyond the original assets being financed.
Corporate resolution to lease - ANSa resolution entered into by the corporation
authorizing the corporation to enter into a lease agreement. Easier way to assure
authorized signatures than a review of the articles of incorporation and by-laws.
Describe Security Deposit Clauses - ANSShould Include:
-The amount of the security deposit
-Where it will be held
-The interest rate paid on the security deposit if applicable
Reasons that the lessor can keep the security deposit
-How the security deposit will be returned
Disclaimer of warranties clause - ANSexculpatory clauses extinguish or limit liability of a
potentially culpable party through the use of disclaimer, assumption of risk and
indemnification clauses as well as releases of liability. Must be Conspicuous.
Fixture Filings - ANShow filed and recorded; potential problems: normally filings are in
the real estate records for the county in which the equipment is located. Additional items
may be required such as legal description, acknowledgement of signatures, etc.
Potential problems may not filing correctly or timely.
Guaranty Agreements - ANSthis document contains all credit support provided by third
parties that are not primary lessees. A lease guarantees the lessee use of an asset and
guarantees the lessor regular payments from the lessee for a specified number of
months or years
DETAILED ANSWERS WITH RATIONALES|A GRADED
'After acquired' clauses - ANSa clause that may appear in contracts, in which a lender
takes a security interest in 'all property that the debtor acquires after consummation of
the loan agreement'. Essentially, such a clause is intended to extend the protection of
the creditor to include assets that the debtor purchases or otherwise acquires after the
loan or debt is incurred.
'Cross default' Agreements - ANSthis agreement provides that if one creditor/lessor has
multiple agreements with debtor/lessee, if one goes into default, they all become in
default
Acceleration Clause - ANSa term that fully matures the performance due from a party
upon a breach of the contract
Additional Collateral - ANSExtra collateral pledged to the successful completion of a
secured loan beyond the original assets being financed.
Corporate resolution to lease - ANSa resolution entered into by the corporation
authorizing the corporation to enter into a lease agreement. Easier way to assure
authorized signatures than a review of the articles of incorporation and by-laws.
Describe Security Deposit Clauses - ANSShould Include:
-The amount of the security deposit
-Where it will be held
-The interest rate paid on the security deposit if applicable
Reasons that the lessor can keep the security deposit
-How the security deposit will be returned
Disclaimer of warranties clause - ANSexculpatory clauses extinguish or limit liability of a
potentially culpable party through the use of disclaimer, assumption of risk and
indemnification clauses as well as releases of liability. Must be Conspicuous.
Fixture Filings - ANShow filed and recorded; potential problems: normally filings are in
the real estate records for the county in which the equipment is located. Additional items
may be required such as legal description, acknowledgement of signatures, etc.
Potential problems may not filing correctly or timely.
Guaranty Agreements - ANSthis document contains all credit support provided by third
parties that are not primary lessees. A lease guarantees the lessee use of an asset and
guarantees the lessor regular payments from the lessee for a specified number of
months or years
