Suretyship

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 is 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…

In the beginning ….. You are totally relaxed.  The bank won’t give your son / daughter / spouse / partner / company / friend a loan unless you sign surety and, as always, it seems perfectly safe at the time. So you ask yourself “What’s the harm? It’s just bank red tape.  Johnny’s new business will fly.  He’ll pay back every cent to the bank and I’ll have helped him.  That’s a parent’s job isn’t it?” But in the end ….. You get stung.  Your signature comes back to haunt you, because our law will generally hold you to what…