Guaranty of Repayment of Bank Loan with Deposit of Additional Security by Guarantor

• Category: Loans and Lending
• State: Multi-State
• Control #: US-1341048BG
• Format: Word; Rich Text

Description

Perhaps the single most important task facing the drafter of a guaranty agreement is the need to ensure that the instrument accurately reflects the intention of the guarantor as to the nature and extent of his or her liability. If the guarantor does not want to render himself or herself liable to anyone who acts on the faith of the guaranty, the creditor or obligee must be named or identified. If the guarantor's liability is to be conditioned on the occurrence of a contingency (other than default of the debtor), the contingency should be described clearly. In addition, the terms of a guaranty agreement should clearly indicate whether the guaranty is to be continuous or whether it is to be restricted to a single transaction or limited number of specific transactions.

Guaranty of Repayment of Bank Loan with Deposit of Additional Security by Guarantor is a form of loan security in which the borrower deposits additional collateral with the lender in order to guarantee repayment of the loan. This type of security is usually requested by the lender when there is a high risk of default. The additional collateral may be in the form of cash, stocks, bonds, real estate, or other types of property. The guarantee of repayment by the guarantor is a legally binding agreement and is enforceable in court. The two main types of Guaranty of Repayment of Bank Loan with Deposit of Additional Security by Guarantor are surety bond and collateral loan. With a surety bond, a third party guarantees repayment of the loan if the borrower defaults. With a collateral loan, the lender places a lien on the collateral and has the right to seize it if the borrower does not repay the loan.