| name | loc-security-deposit |
| title | Irrevocable Standby Letter of Credit — Security Deposit |
| description | Drafts irrevocable standby letters of credit serving as security deposits in commercial lease transactions. Use when a tenant provides an LOC alternative to a cash deposit, when drafting standby LOC instruments for lease security, or when structuring bank guarantees for tenant obligations under UCC Article 5 and ISP98. |
| author | CaseMark |
| author_url | https://github.com/CaseMark/skills/tree/main/skills/legal/loc-security-deposit |
| license | Apache-2.0 |
| version | 0.1.0 |
| execution_mode | open |
| jurisdiction | us |
| practice | real-estate |
| language | en |
| tags | ["drafting","letter","transactional"] |
Irrevocable Standby Letter of Credit — Security Deposit
Drafts a standalone irrevocable standby LOC securing tenant obligations under a commercial lease, compliant with UCC Article 5, ISP98, and state security deposit statutes.
Prerequisites
Gather before drafting:
- Executed lease — deposit amount, notice clauses, cure periods, renewal options, forum-selection terms
- Party details — legal names, addresses, tax IDs for landlord (beneficiary), tenant (applicant), and issuing bank (branch, charter, authorized signatories)
- Property description — address and legal description matching the lease
- State deposit statute — jurisdiction caps, interest accrual rules, or special conditions on LOC alternatives
- Bank requirements — signature authority rules, transfer fee schedule, LOC reference numbering convention
Quick Start
- Extract lease terms: deposit amount, default triggers, notice periods, renewal options
- Confirm state statute requirements for LOC-as-deposit (caps, interest, return timelines)
- Verify issuing bank accepts custom drafts or requires its own standard form
- Draft LOC per output structure below
- Validate drawing conditions are facially determinable with no investigative burden on bank
Output Structure
Header
| Element | Content |
|---|
| Title | "IRREVOCABLE STANDBY LETTER OF CREDIT — SECURITY DEPOSIT" |
| Reference No. | Bank's standard LOC numbering |
| Issuance Date | Date of execution |
| Governing Rules | "Issued subject to ISP98 and UCC Article 5 as adopted in [Bank's State]" |
| Lease Reference | Lease date, property address, landlord name, tenant name — matched exactly to lease |
Section 1: Parties
- Issuing Bank — legal name, principal office, branch, charter/regulatory info, authorized signatories
- Beneficiary (Landlord) — legal name per lease, notice address, tax ID
- Applicant (Tenant) — legal name, co-tenants/guarantors if any
- Address notice routing if property management company involved or ownership may transfer
Section 2: Credit Amount & Purpose
- State amount in numerals and words; reconcile with lease deposit requirement
