Malaysia Real Estate & Guarantors

Guarantor-ing Real Estates in Malaysia - Knowing Your Guarantor Rights

A guarantor is a person who agrees to indemnify the holder of a loan all (debtor) or a portion of the unpaid principal balance in case of default by the borrower.

Traditionally, there are many who think that being a guarantor reflects the nature of owning a good character -- It really is true at some time; but many do not really realize the risk they're about to take; by simply starting to be a guarantor.

A guarantee is a legal contract that binds the guarantor to cover whatever debt a particular borrower fail to pay. The financial institution is able to take legal action against the guarantor if the borrower defaults his/her debts. Either way, both the lender and the guarantor is liable under the binding legal contract between the bank.

How well do you know your Guarantor Rights?

In events where guarantor statuses are impossible to avoid, it is always beneficial to know guarantor rights to prevent any mishaps. There are certain rights (before and after signing the contract) accorded to the binding contract between both the financial institution and debtor, and the guarantor. Among vital points are:

1. The guarantor has the right to obtain outstanding balances information of the borrower's account, with the financial institutions; and is subject to the borrower's consent.
2. The guarantor has the right to call upon the debtor to repay the debt and release the guarantor from all liabilities under the guarantee.
3. The guarantor has the right to seek legal advise (at own cost) before signing the binding legal contract.
4. The guarantor has the right to obtain a copy of the guarantee letter and any other docs related to the loan transaction.
5. The guarantor has the right to file a lawsuit against the lender should the outstanding sum be paid by the guarantor (when the debtor fails to clear debt)

Guarantees are usually given and only a financial institution. Given sets of legal terminologies (terms & conditions), the guarantor may not necessarily fully understand every single aspect of the binding contract. Explanation requests (regarding the contract) to appropriate financial institution officer(s) can be made prior to verbal agreement of the loan and guarantor status. Alternatively, the guarantor's personal lawyer can also explain and advise the guarantor should there be any trust related troubles pro-founded.