“In this kind of environment it is not unusual that a creditor may want some third party to guarantee the debt of a borrower. Parents may be asked to guarantee a lease for one or more of their offspring. (And which would you prefer: that you guarantee their lease, or that they move back in?) In-laws may be asked to guaranty some debt taken on by newly-weds; and a person venturing into a new business may need to turn to friends and/or family to guarantee a loan for start-up costs.”While guaranteeing a family member’s loan is a traditional way to help someone get started in life or business, it should not be taken lightly. “Loan guarantors need to fully understand the terms of their guarantee.”
A California case points out the pitfalls of co-signing or guaranteeing another’s obligation. In this case, the bank went after the guarantors while it did not pursue the borrowers.
The guarantors didn't think it was right or fair that they should be pursued while the original borrower and one of the guarantors stood by. However, the trial court ruled against them; and the appellate court sustained the trial court's decision.
“There are two issues here that other, perhaps more pedestrian, potential guarantors want to keep in mind. More accurately, there is one main issue, and two examples of it. The main issue is simply this: IF YOU ARE GOING TO GUARANTEE A LOAN, BE SURE YOU READ THE DETAILS OF THE GUARANTEE CAREFULLY.”
“The point is simple. If you are going to guarantee a loan – which may be a terrific thing to do for someone – be sure you read the terms of the agreement carefully. Have a trusted attorney review it. You could be glad you did.”Read the full article from Realty Times.
For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Title Inc.
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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