A guaranty is a contract under which one person agrees to pay a debt or perform a duty if the other person who is bound to pay the debt or perform the duty fails to do so. A guaranty of the payment of a debt is different from a guaranty of the collection of the debt. A guaranty of payment is absolute while a guaranty of collection is conditional.
A Nevada Guaranty of Collection of Promissory Note is a legal document that provides additional security to lenders in Nevada by guaranteeing the collection of a promissory note. This agreement is a contract between two parties, where the guarantor agrees to pay the outstanding balance of a promissory note if the borrower defaults on their payments. In Nevada, there are different types of Guaranty of Collection of Promissory Note agreements, including: 1. Absolute Guaranty: This type of agreement makes the guarantor fully responsible for the repayment of the promissory note. In case of default by the borrower, the lender can directly pursue the guarantor for the full amount owed. This type of guaranty offers the highest level of protection to lenders. 2. Limited Guaranty: With a limited guaranty, the guarantor's responsibility is restricted to a specific amount or a defined portion of the outstanding debt. The lender can only seek payment from the guarantor up to the agreed-upon limit. 3. Continuing Guaranty: A continuing guaranty remains in effect until it is terminated by the guarantor or the lender. This means that even if the original promissory note is paid in full and a new one is issued, the guarantor's obligations continue. 4. Conditional Guaranty: In a conditional guaranty, the guarantor's obligation to make payment is contingent upon certain conditions being met. These conditions may include default by the borrower, exhaustion of other collection remedies, or obtaining a court judgment against the borrower. A Nevada Guaranty of Collection of Promissory Note typically includes various key elements, such as: 1. Identification of the parties involved: The agreement should clearly state the names of the borrower, the lender, and the guarantor. 2. Loan details: The promissory note that the guarantor is guaranteeing should be described in detail, including the principal amount, interest rate, repayment terms, and any applicable fees or penalties. 3. Obligations of the guarantor: The agreement must outline the guarantor's responsibilities, including the guarantee of payment, terms of payment, and any specific conditions or limitations. 4. Default and remedies: The consequences of borrower default should be clearly defined, including the lender's rights to pursue the guarantor for collection. It may include provisions for the enforcement of the agreement, such as arbitration or court proceedings. 5. Indemnification: The guarantor should agree to indemnify and hold the lender harmless from any losses, costs, or damages incurred due to the borrower's default. 6. Termination: The conditions under which the guaranty may be terminated should be specified, including any notice requirements or events that would trigger termination. It is essential to consult with a qualified attorney specializing in Nevada contract law to ensure that a Guaranty of Collection of Promissory Note is properly drafted and legally enforceable.
