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What are the limitation of actions against guarantors? When will your liabilities as a guarantor be discharged?

Limitation Of Action Against Guarantors

  • Where a guarantee is made payable on demand, a financial institution cannot bring an action against the guarantor until a demand has in fact been made under the guarantee against the guarantor

  • Depending on the provisions of the contract of guarantee, a demand may be served by hand, by ordinary post or by registered mail

  • The financial institution has six years from the date of the first demand to bring legal action against the guarantor

Discharge Of Guarantors

  • A guarantor is released from his obligations under a guarantee upon full payment of the debt owing to the financial institution

  • For a guarantee to be enforceable against the guarantor, the terms of a guarantee must be adhered to by the financial institution

Ensure that you are aware of your

liabilities

in the event that

variations

are made to the terms and conditions of the loan


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Reprinted with permission from BankingInfo (A Consumer Education Programme)


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Knowledge Base ID :   1201
Last Reviewed :   May 22, 2014
Source :   BankingInfo
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