Common use of Notice of an Encumbrance Clause in Contracts

Notice of an Encumbrance. (a) If the Secured Party receives actual or constructive notice of an Encumbrance over the Secured Property or of the perfection of an Encumbrance, the Secured Party: (1) may open a new account in the name of the Grantor in its books; or (2) is regarded as having opened a new account in the name of the Grantor in its books, on the date it received or was regarded as having received notice of the Encumbrance or perfection. (b) From the date on which that new account is opened or regarded as opened: (1) all payments made by the Grantor to the Secured Party; and (2) all financial accommodation and advances by the Secured Party to the Grantor, are or are regarded as credited and debited, as the case may be, to the new account unless otherwise specified by the Secured Party. (c) The payments by the Grantor under clause 7.4(b) must be applied in the manner determined by the Secured Party or, failing a determination: (1) first, in reduction of the debit balance, if any, in the new account; and (2) second, if there is no debit balance in the new account, in reduction of the Secured Moneys which have not been debited or regarded as debited to the new account.

Notice of an Encumbrance. (a) If the Secured Party receives actual or constructive notice of an Encumbrance over the Secured Mortgaged Property or of the perfection of an Encumbrance, the Secured Party: (1) may open a new account in the name of the Grantor in its books; or (2) is regarded as having opened a new account in the name of the Grantor in its books, on the date it received or was regarded as having received notice of the Encumbrance or perfection. (b) From the date on which that new account is opened or regarded as opened: (1) all payments made by the Grantor to the Secured Party; and (2) all financial accommodation and advances by the Secured Party to the Grantor, are or are regarded as credited and debited, as the case may be, to the new account unless otherwise specified by the Secured Party. (c) The payments by the Grantor under clause 7.4(b8.4(b) must be applied in the manner determined by the Secured Party or, failing a determination: (1) first, in reduction of the debit balance, if any, in the new account; and (2) second, if there is no debit balance in the new account, in reduction of the Secured Moneys which have not been debited or regarded as debited to the new account.