A personal guarantee is an individual’s legal promise to repay credit issued
to a limited company
The directors of the company (“the Guarantor”) are usually asked to provide the guarantee.
Providing a personal guarantee means that if the company becomes unable to repay a debt then the individual is personally responsible.
In property transactions, the lender is the party normally asking for the guarantee to provide additional security for the money lent by them for the purchase.
It is imperative that the Guarantor obtains legal advice independently from the company (and this is usually required by the lender)
to ensure that the Guarantor fully understands the implications of the guarantee documents.
If for some reason the company defaults on the payments to the lender, then the lender can try to obtain those payments from the Guarantor.
It does not matter if the company goes into liquidation or ceases to exist, the Guarantor will remain liable for the debt.
Keira and Sarah-Jane Newsam can advise on personal guarantees and provide the necessary independent legal advice. Please contact us further for more information.
0333 050 6925
22 St Johns North, Wakefield, WF1 3QA
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