If a loan company signs a contract with no collateral at the time of the signing, can they later ask for collateral?

Get Legal Help Today

 Secured with SHA-256 Encryption

If a loan company signs a contract with no collateral at the time of the signing, can they later ask for collateral?

A loan company that we are going through signed a contract with us and never said anything about collateral. They are requiring collateral after the contract has already already signed and won’t transfer our funds until we give them collateral.

Asked on August 18, 2011 Washington

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

A contract, once signed, binds both parties. Neither party can unilaterally (or on its own) change the terms of the contract. So if a contract was signed for an unsecured (no collateral) loan, it *should* be the case that they have  to provie the loand without getting any collateral. The key issue, however, is exactly what does the contract say? Do they have the right to decide to not lend, or to put additional terms or conditions on the loan, etc. If the contract lets them do this, they can do this...or if they discovered some falsehood, omission, or error, etc., in your application, that would probably give them grounds. You should review the contract again carefully, especially the "small print"; you could also ask the loan company to explain why they think they can ask for collateral and to point out the term(s) in the contract they assert allows this. Good luck.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption