A guaranty is an undertaking on the part of one person (the guarantor) that is collateral to an obligation of another person (the debtor or obligor), and which binds the guarantor to performance of the obligation in the event of default by the debtor or obligor.
The contract of guaranty may be absolute or it may be conditional. An absolute guaranty is a contract by which the guarantor has promised that if the debtor does not perform the obligation or obligations, the guarantor will perform some act (such as the payment of money) to or for the benefit of the creditor.
A line of credit is an arrangement in which a lender extends a specified amount of credit to borrower for a specified time period.
The Arizona Absolute Guaranty of Payment in Consideration of Extension of a Line of Credit is a legal contract that provides assurance to a lender that the borrower will make timely payments and fulfill their financial obligations. This guarantee serves as a safeguard for the lender, ensuring that they will receive repayment even if the borrower defaults on the line of credit. Keywords: Arizona, Absolute Guaranty of Payment, Consideration, Extension, Line of Credit This type of guaranty is commonly used in various financial transactions, particularly when a borrower seeks to extend their line of credit. Here are a few different types of Arizona Absolute Guaranty of Payment in Consideration of Extension of a Line of Credit: 1. Personal Guaranty: This type of guaranty involves an individual who guarantees the repayment of the line of credit personally. The individual's assets and creditworthiness are taken into account while issuing the extension of credit. 2. Corporate Guaranty: In this case, a corporation provides the guaranty, taking responsibility for the repayment of the line of credit on behalf of the borrower. The corporation's assets and creditworthiness are assessed to determine the eligibility for credit extension. 3. Limited Guaranty: A limited guaranty imposes restrictions on the obligations of the guarantor. Instead of assuming the full responsibility for the repayment, the guarantor agrees to cover a specific portion or is liable up to a certain amount in case of default. 4. Continuing Guaranty: This type of guaranty applies to an ongoing line of credit where the guarantor's obligations persist even if the borrower replenishes the line of credit or pays off the outstanding balance. It remains in effect until it is specifically canceled or terminated. 5. Full Recourse Guaranty: A full recourse guaranty holds the guarantor liable for the complete repayment of the line of credit if the borrower defaults. In case of inadequate funds from the borrower, the lender can pursue the guarantor for the remaining balance. When entering into an Arizona Absolute Guaranty of Payment in Consideration of Extension of a Line of Credit, it is essential to consult with legal professionals to understand the rights, obligations, and potential risks involved. The agreement may include further provisions such as interest rates, repayment terms, and the lender's right to access collateral in the event of default.
