No attachment: Overview, definition, and example
What is no attachment?
No attachment refers to a contractual provision that prevents a party’s assets from being seized, frozen, or subject to legal claims by creditors or other third parties. This clause is often included in financing, trust, or security agreements to protect specific assets from being used to satisfy debts or liabilities.
For example, a company that secures a loan may include a no attachment clause in the agreement to ensure that certain operational assets remain protected from creditor claims, even in the event of financial difficulties.
Why is no attachment important?
A no attachment clause is important because it safeguards key assets from being seized due to financial disputes or legal claims. It helps ensure business continuity by preventing disruptions caused by asset freezes, liens, or creditor actions.
For businesses and investors, including a no attachment provision in agreements helps protect essential assets such as equipment, intellectual property, or cash reserves from being subject to legal proceedings unrelated to the core obligations of the contract.
Understanding no attachment through an example
Imagine a technology startup takes out a business loan but wants to ensure that its intellectual property (IP) remains protected from creditor claims. The loan agreement includes a no attachment clause stating that the company’s patents and trademarks cannot be seized or used as collateral, ensuring that its core business assets remain secure.
In another scenario, a real estate trust holds property assets for investors. A no attachment provision in the trust agreement ensures that the trust’s real estate holdings cannot be seized due to the personal financial issues of individual investors, protecting the overall investment structure.
An example of a no attachment clause
Here’s how a no attachment clause might appear in an agreement:
“The assets and property of [Party Name] shall not be subject to attachment, garnishment, seizure, or any other enforcement action by any third party, except as expressly permitted under this Agreement.”
Conclusion
A no attachment clause helps protect valuable assets from being seized or frozen due to unrelated financial disputes or legal actions. It ensures that businesses and individuals can operate without the risk of losing essential property to creditor claims.By including a no attachment provision in contracts, businesses can safeguard critical assets, maintain operational stability, and prevent disruptions caused by financial or legal challenges.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.