How to prepare a contract diligence findings report for Security Agreements

Prepare a grantor-side security agreement diligence report by reconciling the operative documents, mapping each grantor’s collateral and secured obligations, and separating contractual exposure from attachment, perfection, and priority questions. Record material findings against precise sources, explain their transaction consequences, identify missing evidence, and assign remediation owners and milestones. The resulting deliverable is a findings matrix supported by a short executive summary: a decision document showing what must be resolved before approval, what can be accepted, and what requires further investigation.

When to use this workflow

Use this workflow for a refinancing, acquisition, proposed collateral release, new grantor joinder, or internal financing review. It serves grantor counsel and in-house legal teams assessing existing security commitments, not preparing a comprehensive enforceability opinion or filing audit.

The scope is US commercial finance, using New York Article 9 as a specified statutory reference rather than a nationwide rule. Determine applicable law and statutory versions for the transaction. The official pages for Section 9-203, Section 9-204, and Section 9-301 display revisions dated June 5, 2026; those page labels do not themselves resolve effective-date or transition questions. The legal reference date for this guide is October 13, 2026.

What you need

Collect the executed security agreement, schedules, amendments, joinders, and incorporated definitions. Include relevant credit agreements or indentures, guarantees, intercreditor arrangements, control agreements, and release documents. Obtain an amendment history so an apparently complete agreement does not conceal superseded terms.

Request a grantor entity list and asset inventory organized by owner and collateral class. Distinguish receivables classified as accounts from bank deposit accounts. If perfection or priority is within scope, obtain available searches and filing records, recording their dates and coverage rather than treating them as conclusive.

Establish the transaction objective, proposed approval sequence, grantor negotiating positions, and responsible reviewers. Your negotiation playbook is your own checklist and instructions. Identify its version so deviations are measured against approved positions, not assumed market practice. Obtain treasury and operations contacts who can verify reporting capabilities and relevant event history.

Use the template

The Security Agreements — Contract diligence findings report combines a findings matrix with a short executive summary. Copy this table into your working document or spreadsheet. Use one row per decision; split issues with different owners or remediation paths.

Assign document IDs first. “SA-01, executed, § 2.1, p. 4” is more useful than “security agreement.” For a missing schedule, cite the provision incorporating it and state that it was not supplied.

Keep evidence separate from analysis. Evidence contains a short quotation or faithful paraphrase; impact explains the grantor consequence. Confidence describes evidentiary support, not commercial importance. A clearly documented provision can create substantial exposure.

Identify the responsible role or person and a proposed completion milestone. That milestone is not a contractual deadline. Preserve contractual timing in the evidence field or a cross-referenced obligation register. Reference supporting inventory rows or spreadsheet cells where they establish the affected assets.

Step by step

1. Define the reporting question and control the documents

State the question: for example, whether existing collateral commitments obstruct refinancing or leave material obligations unresolved. Specify covered grantors, facilities, collateral classes, and excluded inquiries.

Create an index identifying execution status, effective dates, amendments, superseded provisions, and missing attachments. Compare signature blocks and joinders with the entity list. A draft may explain negotiations but should not become the source for an operative obligation. Confirm whether referenced documents were supplied, rather than assuming the agreement contains every relevant term.

Record: a scope row and separate material document-gap rows, each with a request owner and resolution milestone.

2. Map collateral by grantor, including exclusions

Read the grant with definitions, schedules, proceeds provisions, after-acquired language, and exclusions. Match coverage to each entity’s asset inventory. Identify exclusions that cease when consent is obtained or a restriction disappears; do not assume they remain permanent.

Under New York UCC § 9-108, descriptions generally must reasonably identify collateral, subject to special rules. An all-assets description alone is insufficient for the security agreement. Description solely by collateral type is also insufficient for a commercial tort claim. Do not import financing-statement assumptions into this review.

Section 9-204 generally excludes commercial tort claims from attachment through after-acquired clauses while preserving specified proceeds-related routes. Flag classification and description questions rather than assuming a blanket grant resolves them.

Record: grantor, collateral class, operative source, exclusion dependency, and missing ownership or description evidence.

3. Trace secured obligations and release conditions

Follow references defining secured obligations. Determine whether the documents include future advances, additional facilities, affiliate obligations, expenses, indemnities, or surviving obligations. Compare the documented scope with the business team’s refinancing assumptions.

New York UCC § 9-204(c) permits collateral to secure future advances or other value, including value not provided under a commitment. That permission does not establish what a particular agreement secures; inspect its grant and definitions.

Read release provisions alongside the proposed payoff. Identify obligations that must terminate, exceptions for surviving liabilities, required requests or certifications, and the party responsible for release documents. Do not infer release from a repayment projection alone.

Record: the definition chain, grantor exposure, release dependency, requested evidence or clarification, and approval owner.

4. Separate legal conclusions from evidence requests

Treat attachment, perfection, priority, and contractual compliance as distinct inquiries. Under New York UCC § 9-203(b), enforceability generally requires value, debtor rights or transfer power, and a specified evidentiary condition, subject to exceptions. A signed agreement describing collateral is one route; specified possession, delivery, or control arrangements provide alternatives. This does not complete the perfection or priority analysis.

Contractual governing law also does not alone resolve perfection and priority. Section 9-301 generally points to debtor-location law, subject to its exceptions and Sections 9-303 through 9-306B.

Record: the precise inquiry, evidence available, applicable-law dependency, specialist owner where needed, and a bounded conclusion such as “perfection not assessed pending control agreement review.”

5. Test operational obligations with their performers

Extract material reporting, inspection, insurance, collateral-maintenance, and notice duties. Preserve triggers, thresholds, timing units, recipients, delivery mechanics, and incorporated requirements. Distinguish advance consent, advance notice, and post-event notice.

Ask treasury and operations whether they can identify events, retrieve information, and deliver it through the required channel. Examine discretionary information requests for scope, confidentiality, preparation time, certification burden, and cost. Do not convert request-driven duties into invented periodic reporting calendars.

Review evidence of performance only for the period within scope. If event history or delivery records are unavailable, identify that gap rather than declaring compliance or breach.

Record: the requirement, business response, capability or evidence gap, proposed remediation, and operational owner.

6. Prioritize findings and propose decisions

Apply a severity scale tied to transaction consequences. Reserve the highest category for issues requiring resolution or express acceptance before the relevant approval. Distinguish legal uncertainty, business exposure, operational burden, and missing evidence.

Recommend a concrete action: obtain a schedule, verify ownership, narrow secured-obligation language, negotiate reporting limits, or confirm release conditions. Where amendment is appropriate, state the preferred position and acceptable fallback from the identified grantor checklist. Name the person authorized to approve the tradeoff.

A missing document is not automatically a high-severity defect. Explain which decision its absence prevents and why that decision matters.

Record: severity rationale, preferred action, fallback where relevant, decision authority, and residual uncertainty.

7. Reconcile findings and write the executive summary

Recheck rows when supplemental documents arrive. Close findings with evidence rather than deleting their history. If remediation changes text, compare the approved amendment with its executed version and affected schedules. Check that accepted changes appear in the supporting obligation register.

Summarize required decisions, material limitations, and work assigned for later completion. Link conclusions to finding IDs. Separate conditions to approval from administrative follow-up; avoid describing the package as “clean” while material evidence remains unavailable.

Record: final status, closure evidence, accepted residual risk, approval authority, and the next milestone for every open finding.

Worked example

Fictional scenario. Alder Quay Components LLC and its subsidiary, Pine Loom Services LLC, are preparing a $24 million refinancing. All parties, documents, amounts, and provisions below are fictional. Counsel receives executed SA-01 and related CA-01, but not Schedule B or the referenced deposit-account control agreement.

SA-01 § 2.1 grants interests in specified collateral categories, including deposit accounts; § 1.1 excludes deposit accounts listed on Schedule B. Section 2.2 incorporates CA-01’s secured-obligation definition, which includes treasury services. SA-01 § 6.3 conditions release on satisfaction of those obligations, subject to stated surviving-liability exceptions. Treasury supplies a bank-account inventory but has not confirmed service termination. Section 4.4 requires notice within 12 business days after a grantor’s legal-name change. A proposal contemplates changing Pine Loom’s name; occurrence is unverified.

The report changes the refinancing decision. Counsel withholds account-mapping approval pending Schedule B, while treating the control agreement as a separate perfection inquiry. Treasury investigates continuing liabilities before asserting release entitlement. Corporate legal prepares the notice process without reporting an unsupported existing breach. No missing document is treated as proof of an adverse fact.

Common mistakes

• Reviewing only the grant. Trace definitions, incorporated obligations, exclusions, and release conditions before describing exposure.
• Confusing accounts and deposit accounts. Classify assets before mapping the grant; a bank-account inventory does not establish receivables coverage.
• Treating missing evidence as a defect. Identify the unavailable evidence and affected conclusion without inventing adverse facts.
• Combining Article 9 questions. Separate attachment, perfection, and priority, with their own evidence and law dependencies.
• Reporting issues without decisions. Replace “review release language” with a specific request, proposed revision, or approval and its owner.

Final quality check

• Operative citations identify controlling documents and clauses or pages.
• Grantor names, signatures, joinders, amendments, and schedules reconcile.
• Collateral and exclusions are mapped by owner and asset class.
• Secured-obligation and release conclusions trace incorporated definitions.
• Legal propositions match primary sources, applicable versions, and scope limits.
• Contractual timing is separate from proposed remediation milestones.
• Material uncertainty is resolved or assigned, with conditional approvals identified.
• The executive summary matches row status, closure evidence, and residual decisions.

Complete the workflow with DecoverAI

DecoverAI is the Legal Intelligence Platform for litigation and transactions. Its due diligence capabilities include bulk document classification to organize documents and prioritize human review; tabular review supports work across documents. In Word contract review, select the grantor as represented party and provide deal-specific instructions. Findings quote and locate clauses, rank severity, and identify missing language as not present. Lawyers edit or insert suggestions as ordinary tracked changes in the signed-in user’s name, retaining responsibility for legal judgments and report conclusions. Book a demo to discuss this workflow.

Frequently asked questions

Is this report a perfection opinion?

No. It identifies questions and supporting evidence. A perfection conclusion requires separately defined scope, applicable-law analysis, and appropriate records; the report should state what was not assessed.

What if a collateral schedule is missing?

Determine whether the operative description or exclusion depends on it. Identify the affected assets and decision. Do not assume adequate coverage or declare the entire grant ineffective solely because the schedule was not supplied.

Should every notice covenant become a finding?

No. Extract relevant duties into a supporting obligation register. Elevate material ambiguity, capability gaps, missing performance evidence, and transaction dependencies into findings, cross-referencing the register.

Can the report be issued with open issues?

Yes, as a qualified decision document. Identify missing evidence, affected conclusions, owners, and milestones. State which approvals remain conditional and who may accept residual uncertainty rather than implying an unconditional clearance.

Sources

• New York UCC § 9-108 — Sufficiency of Description
• New York UCC § 9-203 — Attachment and Enforceability
• New York UCC § 9-204 — After-acquired Property; Future Advances
• New York UCC § 9-301 — Law Governing Perfection and Priority

This guide is general information about legal workflows, not legal advice for any matter. It was drafted and reviewed with AI assistance. The worked example is fictional. Contract rights and procedure depend on the governing law, the actual wording, and the facts, so check the cited sources and the rules that apply in your jurisdiction before relying on it.