AR HB1255

Adds Arkansas Code 4-56-105 to define and regulate cross-collateralization clauses, which grant security interests to secure debts or obligations other than those originally incurred.

Cross-collateralization clauses are valid and enforceable for personal, family, household, or commercial purposes regardless of whether they are specific or general, identify existing debts, or secure debts for the same purpose as the original debt.

Cross-collateralization clauses that do not identify preexisting debt, value, or obligation are valid if they meet the requirements of this section.

Failure to comply with this section renders the cross-collateralization clause void, but the void clause does not affect the validity of the underlying security agreement, instrument, mortgage, or deed of trust.

Applies to security agreements, instruments, mortgages, or deeds of trust executed on or after September 1, 2021.