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The Hidden risks of Personal Guarantees

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Everyone knows signing a personal guarantee comes with a significant risk, but did you know that many guarantees these days contain clauses which allow the supplier or credit provider to take a charge over any real property you may own, including lodging a caveat? The lodgement of a caveat in Queensland inevitably leads to costly court proceedings, and if the caveat came about as result of a guarantee you’ve signed, you may see yourself embroiled in litigation for no reason other than you simply signed a piece of paper i.e. the guarantee, the default of which was due to no fault of your own.

Some guarantee documents go so far as to allow the supplier or credit provider to apply straight to the Supreme Court for a warrant to sell your property upon default. With clauses such as this in a guarantee, it leaves little room for defending such an application, unless there are grounds to argue that the guarantee should be set aside.

So let this be a warning to you. Be very wary of signing any guarantees’ for family members, or for businesses which you have no involvement the day to day running, because at the end of the day the risk lies with you.

If you do find yourself involved in court proceedings as a result of a guarantee you have signed there may be hope for you yet.  The laws in Australia are very strict with respect to the requirements of disclosure and circumstances under which guarantee’s are signed.  Significant deviation from these requirements may be sufficient to set aside a guarantee.

If you have found yourself involved in litigation, or are about to become involved in litigation as a result of the signing of a guarantee we recommend you contact one of our Litigation lawyers for advice as to the prospects of your guarantee being set aside.  We also recommend you subscribe to our blog because over the coming weeks we will be posting a 3 part series of articles outlining the various circumstances under which a personal guarantee is likely to be set aside.

Our Commercial Litigation team here at Attwood Marshall can answer your queries and assist you with this or any other issue you have. Contact an Attwood Marshall Lawyer today on 1800 621 071 or email info@attwoodmarshall.com.au or complete an online enquiry form.

 

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