Many clients may have provided a Personal Guarantee on behalf of a close friend, family member or part of a business operation.
Karott allows for tracking and monitoring of the value of the given surety and brings that amount into the calculation of total personal financial risk exposure so as to provide the client with a complete and full picture of their position should a claimable event occurs and demands for money is made.
To do this simply
#1. within the cash flow module click on liabilities
#2. click on the tag - Personal Guarantee flag
#3. click confirm at the buttom of the page
Now Karott knows that you want this liability tracked, monitored and brought into calculations within the insurance module.
More information on Personal Guarantees read below
What is a Guarantee? What happens if you sign on that dotted line on behalf of your family or friends?
A guarantee is a contract whereby one person agrees with another to pay some debt or perform some act or duty owed by a third person. This third person remains however primarily liable for such payment or performance and the person giving the guarantee will only become liable on the default of the third party.
The parties to a guarantee contract are:
- The Creditor: The person receiving the benefit of the guarantee is called the creditor. This is usually the bank, finance company, supplier or lender.
- The Principal Debtor: The person who is borrowing the money or obtaining the benefit of the contract.
- The Surety or Guarantor: The person who provides the guarantee is called the surety or the guarantor.
In order for a contract of guarantee to be enforceable, it must be in writing and signed by all the parties. For eg. If you are providing a loan to a friend “A”, it is not sufficient for “B” the person who is going to guarantee the loan to say that he will guarantee the loan. It must be in writing.
What are your liabilities when you sign a contract of guarantee?
The extent and nature of the liabilities of a surety or guarantor will depend on the words of the contract of guarantee. Some guarantees are limited for a fixed amount. Some guarantees are for an unlimited amount. Whatever is alleged as being guaranteed, the court will interpret the contract of guarantee strictly and a surety will not be liable beyond the precise terms of his or her commitment.
What are your rights as a guarantor?
After the guaranteed debt has become due but before the surety or guarantor has been asked to pay for it, the surety or guarantor may require the creditor to call upon the principal debtor to pay off the debt.
At any time after the debt is due, the surety or guarantor may apply to the creditor and pay him off. Upon being provided with proper indemnity for costs, he may sue the principal debtor in the creditor’s name or in his own name if he has obtained an assignment of the guaranteed debt.
As soon as the surety or guarantor has paid to the creditor what is due to the creditor under the contract of guarantee, he is entitled to “step into the shoes” of the creditor and avail himself to all the rights possessed by the creditor in respect of the debt, default or miscarriages to which the guarantee relates.
Thus upon payment, the surety or guarantor has a right to the benefit of all the securities which the creditor has received from the principal debtor.
For example: Where the guaranteed debt is secured by a mortgage executed by the principal debtor, the surety or guarantor is, on payment of the debt in full, entitled to a transfer of the mortgage.
The surety or guarantor has also rights, either express or implied against the principal debtor or his estate for indemnification. The right includes the ability to recoup the amount which the surety or guarantor has actually paid for the principal debtor together with interest. Should the surety or guarantor suffer damage beyond the principal and interest which he is compelled to pay under the contract of guarantee, he is also entitled to recover that damage as well.
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