loc-security-deposit

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:

1. Executed lease — deposit amount, notice clauses, cure periods, renewal options, forum-selection terms
2. Party details — legal names, addresses, tax IDs for landlord (beneficiary), tenant (applicant), and issuing bank (branch, charter, authorized signatories)
3. Property description — address and legal description matching the lease
4. State deposit statute — jurisdiction caps, interest accrual rules, or special conditions on LOC alternatives
5. Bank requirements — signature authority rules, transfer fee schedule, LOC reference numbering convention

Quick Start

1. Extract lease terms: deposit amount, default triggers, notice periods, renewal options
2. Confirm state statute requirements for LOC-as-deposit (caps, interest, return timelines)
3. Verify issuing bank accepts custom drafts or requires its own standard form
4. Draft LOC per output structure below
5. 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