Omnibus Guarantee and Set off Agreement Definition

An Omnibus Guarantee and Set-Off Agreement (OGSA) is a legal document that outlines the relationship between a lender and borrower in case of a default or missed payment. The agreement is a common mechanism used by lenders to secure their loans and minimize the risk of default.

In an OGSA, the borrower provides a guarantee to the lender that they will be responsible for any losses incurred by the lender in case of a default. In return, the lender agrees to provide credit based on terms and conditions agreed upon by both parties. This includes the right to set off any balance owed to the borrower against any amounts owed to the lender.

The set-off provision in an OGSA allows the lender to offset any amounts owed by the borrower against any amounts owed to the borrower by the lender. This means that if the borrower fails to pay back the loan, the lender can recover the outstanding balance through any funds owed to the borrower by the lender, such as a deposit account.

The guarantee provision in an OGSA provides assurance to the lender that in case of a default or missed payment, the borrower will be responsible for any losses incurred by the lender. The borrower may provide collateral or a personal guarantee as security for the loan.

An OGSA is a useful tool for lenders, as it provides them with added security and minimizes their risk of loss. It is important for borrowers to fully understand the implications of the agreement before signing it. Borrowers must ensure that they are able to fulfill their obligations under the agreement and that they fully understand the consequences of default.

In conclusion, an Omnibus Guarantee and Set-Off Agreement is a legal document that outlines the relationship between a lender and borrower in case of a default or missed payment. The agreement provides an added layer of security for the lender and helps minimize the risk of loss. It is essential for borrowers to read and understand the agreement fully before signing it to ensure they are aware of their obligations and the consequences of default.