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Guarantor: What are the risks of being a guarantor in Portugal

What is a guarantor?

A guarantor is someone who guarantees with their personal assets the fulfilment of another person’s obligation. This bond is called a guarantor.

It is a guarantee of obligations which has great practical importance, being very common in housing credit contracts and lease agreements.

Advantages for the creditor/disadvantages for the guarantor:

The surety grants greater confidence to the creditor in the satisfaction of his claim, although it often brings inconveniences to the guarantor.

The fact is that the surety allows the creditor to enforce the entire personal assets of the guarantor in the event of non-performance of the obligation by the principal debtor. However, two situations must be distinguished: whether or not the waiver of the benefit of prior excussion has been stipulated.

What is the benefit of prior excussion?

If the benefit of the previous excussion was waived, the creditor can execute the assets of the guarantor without needing to execute all the assets of the principal debtor first.

If the guarantor has not waived the benefit of the previous excursion, the creditor can only execute his assets after all the assets of the principal debtor’s assets have been previously executed.

If there is the benefit of prior excursion, the bailment has the particularity of subsidiarity.

Scope of the liability of the guarantor:

The liability of the guarantor’s assets covers, in principle, all the assets of the guarantor, although it may be limited to some of the assets that comprise it.

On the other hand, the liability of the guarantor has the content of the principal obligation and includes all the legal and contractual consequences of the debtor’s default or fault.

Hence, the liability of the surety covers not only the instalment due but also the reparation of the damages resulting from the culpable contractual breach or the conventional penalty that may have been agreed upon.

Accessory nature:

Another characteristic of surety is accessoriness. This translates into the circumstance that this guarantee cannot exceed the principal debt, nor can it be contracted under more onerous conditions.

On the other hand, the nullity or annulment of the principal debt renders the guarantee invalid and; if the principal obligation is extinguished, the guarantee is extinguished.

Voluntary and legal guarantee:

As a rule, the surety is freely agreed upon by the parties: it is voluntary or conventional surety.

However, there may exceptionally be cases of the legal guarantee, which occurs when someone responds as guarantor without there being any contract of guarantee.

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