What is a guarantor? and should you agree to accept liability for someone else’s debt.
Someone who agrees to stand as guarantor for another person’s debt becomes personally liable if the money is not repaid. If you sign such a guarantee you are promising that if he/she does not pay, you will.
Only written guarantees are enforceable. If you are asked to sign a document in connection with credit which is being given to someone else, read it carefully. Never sign a guarantee or surety agreement unless you are willing and able to pay up if the worst comes to the worst.
Guarantor/ surety agreements are usually used by banks, when people take loans. People who seek loans are usually asked by the bank to provide another person who is willing to sign a guarantor/ surety agreement. Also real estate agents have a tendency to make use of surety agreements when they rent out flats in town.
Keep in mind that any failure by the actual debtor to pay the debt whether because they have lost their job or fallen sick, will still be required to pay up their debt.
If the debt is being paid in instalments by the actual debtor, one missed payment may result in you as the guarantor/surety to be required to pay up the whole amount as a lump sum.
If you are made to pay up someone’s debt under a guarantor/surety agreement you can claim your money from the actual debtor for covering his/ her debt.
The author of this snippet is Simon Flemming Mutandi, a lawyer who writes in his personal capacity. The purpose of these pieces is to share insights into the law. The language and content is simplified to give the reader a digest of complex legal issues that apply in different factual situations. For more information contact 0783475020 or email simonflemming1@gmail.com.
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