The (personal) surety bond

A surety (or: bail) is a security right that allows the creditor to recover his claim not only from the debtor, but also from a third party: the guarantor. The guarantor then guarantees the debt of another person with his own assets. This often occurs with companies that take out financing. The Managing Director then personally guarantees the debt of his private limited company. It is also common for parents to act as guarantors for rental obligations or mortgage debts of their child. But there are also conceivable situations where there is more distance between the debtor and the guarantor.

Risks of surety

Pledging is not without risk. If the debtor can no longer meet his obligations, the guarantor's private assets may be addressed. If the surety is married or registered partner, then the partner's assets can often be addressed as well. But even without a marriage or registered partnership, the partner can be adversely affected by bail. For example, if the home is jointly owned, then the creditor can also recover on the guarantor's share of the home. In practice, this can then lead to a foreclosure sale.

Guarantees in the case of surety

Therefore, there are several legal provisions that protect the guarantor or their partner. If the guarantor is married or in a registered partnership, the partner must give consent. This is stated in Article 1:88 of the Civil Code. Without that consent, the partner can void the surety. Another protection provision is in Article 7:857 BW. This applies to private surety. That article stipulates that if the surety is a natural person not acting in the exercise of a profession or business, and the amount of the principal debtor's obligation is not fixed, the surety is valid only if a maximum amount is set.

Without deficiency debtor, no recourse against surety

In addition, the guarantor is more or less protected because it can only be sued at the time the principal debtor defaults. Moreover, when the creditor serves a notice of default on the debtor, it must also send a copy of it to the guarantor.

What if the deposit is also not paid?

If the guarantor also fails to pay, collection proceedings can be initiated against both the debtor and the guarantor. In those proceedings claimed payment be. If the court grants the claim, recourse is available by foreclosure lay. 

Legal advice on bail

There is a lot involved in agreeing a surety bond or enforcing surety. There are more hooks and eyes than often thought. Therefore, contact Lexys Attorneys at Law specialized in debt collection, attachment and execution for good advice on bail bond and enforcement of surety.