Free Guaranty Agreement

A guaranty agreement is a legally binding contract where one party (the guarantor) accepts any responsibilities and/or payments of a debt in the event that the borrower defaults. In short, the guaranty is a safety net for a loan agreement or promissory note or some other sort of obligation which will require payments.

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Suppose a lender requires additional assurance that a loan will be fully repaid. As an alternative to requiring collateral, the lender may request another party to execute a Guaranty Agreement. By executing a Guaranty Agreement, a party agrees to step in and pay the loan in the event the original borrower defaults.

 

Whether you are the borrower, the lender, or the guarantor, the Guaranty Agreement may be used as a safety net to ensure that all the conditions of the original loan are met.

Frequently Asked Questions

A guaranty agreement is a legally binding contract where one party (the guarantor) accepts any responsibilities and/or payments of a debt in the event that the borrower defaults. In short, the guaranty is a safety net for a loan agreement or promissory note or some other sort of obligation which will require payments.

A guaranty agreement is an important document to have in place, regardless of what role you play in the loan situation. As the lender, you have additional assurance that the money you lend will be repaid. As the borrower, you have the extra support of another party in case something happens and you must default. As the guarantor, you are securing the obligation for the borrower for some reason personal to yourself.

The guaranty agreement requires:

  • Effective Date - Select the date that this guaranty agreement will be signed and made effective.
  • Execution Location - Provide the location where this guaranty agreement will be executed in front of a notary.
  • Guarantor Details - Give the name and address of each guarantor executing the agreement.
  • Original Contract - The guaranty agreement is designed to work in tandem with other loan documents executed by the Creditor and Debtor. Although there may be multiple loan documents, their collective shorthand designation in this agreement is the “Guaranteed Contract.”
    • Although the Guarantor is agreeing to make payments under the Guaranteed Contract in the event that the Debtor defaults,this does not give them the same rights as the Debtor under the Guaranteed Contract. The Guarantor will not obtain any interest in any collateral being held as security under the Guaranteed Contract. Modifications, assignments, extensions or releases under the Guaranteed Contract may occur without the consent of the Guarantor.
  • Creditor Details - Provide the details of the party that is promised repayment by the debtor.
  • Debtor Details - Provide the details of the party that has promised to repay the creditor.
  • Guaranty Limitations - Based on your answers to the questionnaire, there may be limits to the guaranty:
    • Monetary Limits - If you desired a monetary limit, this will be contained in paragraph 4 of the guaranty agreement. In this situation, if the Debtor default, the guarantor only has to pay up to the amount contained in paragraph 4.
    • Time Limit - Typically, the guaranty will last the entire duration of the Guaranteed Contract. However, you may set a time limit on the guaranty agreement that make the guarantor liable only for a certain duration of time.

To be legally enforceable, a guaranty agreement must be signed in the presence of an unbiased witness, preferably a notary public. By default, we include a notarization section on your guaranty agreement.

 

Please Note: The use of a notary ensures that no one challenges any signatures later and is a secure way to firmly establish the effectiveness of your document.

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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.