“Suretyship is the precursor of ruin” (Thales of Miletus, one of the Seven Sages of Ancient Greece)
As the philosopher and mathematician Thales pointed out two and a half millennia ago, signing surety for another’s debts carries huge risk. Yet every day directors of property holding companies happily sign personal suretyships for their company’s (usually substantial) debts.
The problem is that it all seems so safe in the beginning. You need a bank loan to buy or develop a property, you’ve done your homework and the deal’s a good, sensible one. It’s only when things go wrong down the line that your signature on that suretyship document comes back to haunt you, and by then it’s far too late – or is it?
A recent High Court decision illustrates one of the very restricted circumstances in which you may be able to escape from the trap you signed yourself into.
The developer, the trust and the bank
So when can you escape from a suretyship?
The developer and his trust are accordingly off the hook. But there’s a strong confirmation there of just how narrow your potential escape route is from a suretyship. So as always take legal advice before signing anything!
This article is for general information purposes and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us At DKVG Attorneys for specific and detailed advice.
For more information, contact our Conveyancing, Property & Real Estate department
© DotNews, 2005-2018. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
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