May 28 2010 Sometimes a person is asked by a family member or
friend to act as guarantor on a mortgage or personal or business
loan from a bank or other lender. In such cases, the guarantor
will be asked to sign a guarantee agreement (which may also be
called a surety agreement). A guarantee agreement is not a
statement declaring that a guarantor is honourable and capable
of repaying a loan; rather, it is a legal document that can
cause financial hardship to a guarantor. A lender usually
requires a guarantee because it is unsure whether a borrower
will be capable of repaying a loan. In such circumstances, the
lender will not advance the loan without the comfort of a
guarantor, who should be alert to the reason that the loan
requires a guarantee agreement. A guarantee agreement should be
in writing and signed by the guarantor, but the borrower need
not be a party to it. If the guarantee agreement is not
expressed to be a deed, normal contractual rules apply and the
lender should give a consideration to the gua