Guaranty Agreement

A Guaranty Agreement is a contract that outlines a guarantor's duties and obligations in the event that the debtor defaults on the guaranteed loan.

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If someone asks you to help secure a financial institution loan, they usually require you to become a guarantor.

As a guarantor, you have more assets or better credit so you can help the borrower secure a loan. The guarantor and lender, and borrower/debtor are to enter into a Guaranty Agreement.

What Is a Guaranty Agreement?

A Guaranty Agreement is a legally binding contract where the guarantor agrees to be responsible to the lender if the debtor defaults.

This agreement provides additional assurance to the lender that the borrower or debtor would be able to service the loan – on the back of the guarantor if necessary.

Somebody should only choose to enter into a Guaranty Agreement with a person who deserves their trust or desire to help.

Other Names for Guaranty Agreement

Depending on your state, a Guaranty Agreement may also be known as:

  • Guaranty Agreement Form
  • Personal Guaranty Agreement
  • Corporate Guaranty Contract
  • Agreement for Debtor Guaranty
  • Third-Party Guaranty

Who Needs a Guaranty Agreement?

Guaranty Agreements are not uncommon with lending institutions, which may request borrowers to enlist a guarantor's higher creditworthiness, especially for more substantial loans. Of course, you will not have to prepare your own agreement if you are working with a lending institution. You can also act as a guarantor to a private or individual lender.

Why Use 360 Legal Forms for Your Guaranty Agreement?

Customized for you, by you

Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Guaranty Agreement.

Specific to Your Jurisdiction

Laws vary by location. Each document on 360 Legal Forms is customized for your state.

Fast and easy

All you have to do is fill out a simple questionnaire, print, and sign. No printer? No worries. You and other parties can even sign online.

How to Create a Guaranty Agreement with 360 Legal Forms

A Guaranty Agreement is not overly complicated, but you want to get everything right, especially if you are a private lender and lend money to someone who has a guarantor. In this case and more, the ability to depend on a proven template can go a long way.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Guaranty Agreement?

To create your document, please provide:

  • Debtor Details: The legal name and contact information of the debtor or borrower.
  • Lender Details: Full legal name and contact information of the lender or creditor.
  • Guarantor Details: The legal name and contact information of the guarantor.
  • The Effective Date: The exact when the agreement is to be signed and become effective.
  • Monetary Limit: If a borrowing limit is guaranteed, it should be noted in a separate paragraph.
  • Time Limit: Specify the duration of the loan and guaranty.
  • Witness: This agreement requires a witness to the signatures.
  • Signatures: All three parties must sign the agreement in the presence of a witness, who must also sign the contract.

Guaranty Agreement Terms

  • Lender: In the context of a Guaranty Agreement, the lender supplies the funds to the debtor.
  • Debtor: In the context of a Guaranty Agreement, the borrower receives the lender's funds.
  • Guarantor: In the context of a Guaranty Agreement, the person guarantees the debt against the debtor's default.
  • Loan: In the context of a Guaranty Agreement, this is the loan being guaranteed
  • Waiver: forfeiture of a known right.
  • Restitution: Damages assessed.
  • Mediation: A dispute resolution process outside of the courts.

Guaranty Agreement Signing Requirements

To be legally enforceable, the Guaranty Agreement requires the signatures of all parties included in the agreement in the presence of a witness. In certain jurisdictions, the witness has to be a notary public.

What to Do with Your Guaranty Agreement?

After you have created your Guaranty Agreement on 360 Legal Forms, print out a copy and carry out the signing requirements outlined above. Once executed, distribute a signed copy to all three parties.

Frequently Asked Questions

Guaranty Agreements come with all levels of conditions and restrictions. An absolute Guaranty Agreement doesn’t have any conditions for the creditor. If a Guaranty Agreement does not record any restrictions, it defaults to being absolute. By contrast, a conditional Guaranty Agreement means that in the event of a default, there exist other conditions.

The guarantor can be a corporation or an individual. And by extension, the former would get involved in a Corporate Guaranty Agreement and the latter a Personal Guaranty Agreement.

A promissory note is essentially a type of loan agreement. It can also be a financial instrument used as documented proof of money owed. More formal than IOUs, promissory notes can involve a collateral asset, which is called a secured promissory note. In contrast, an unsecured promissory note is one that is not secured by collateral or anything.

A limited guaranty is a Guaranty Agreement where the guarantor is only guaranteeing a loan up to a specific amount. In this instance, the contract or agreement must clearly state the amount guaranteed, if it is not the same as the amount of the loan. This type of guaranty is most commonly seen in mortgage agreements, though not exclusively.

If the borrower defaults on the loan, the creditor has a right to ask for the total owed immediately from the guarantor if and only if there is an acceleration clause in the Guaranty Agreement, in which case the guarantor would be on the hook for the full amount owed at the lender's request.

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Applicable to all 50 states
Applicable to all 50 states

Our documents are vetted by lawyers and are applicable to all 50 states.