A surety is a person who guarantees the performance of another person's obligations or the payment of a debt. A surety is often required in financial transactions where one party lacks sufficient collateral or credit to secure a loan or other type of financial arrangement. In these cases, the surety steps in to provide a guarantee that the obligation will be fulfilled.
As a surety, there are certain rights and duties that you should be aware of.
One of the primary rights of a surety is the right to be informed. This means that the borrower must keep the surety informed of any changes to the terms of the loan or financial arrangement. The surety should also be informed of any problems or issues that may arise during the course of the transaction.
Another right of the surety is the right to be protected. This means that the borrower must take reasonable steps to protect the surety from financial loss. For example, if the borrower defaults on the loan, the surety may be required to pay the debt. In this case, the borrower should take steps to minimize the amount of money that the surety may be required to pay.
Along with these rights, there are also certain duties that the surety is responsible for.
One of the primary duties of a surety is to pay the debt if the borrower defaults. This means that the surety must be financially capable of paying the debt and must be willing to do so if necessary.
Another duty of the surety is to act in good faith. This means that the surety must act honestly and fairly in all matters related to the financial arrangement. The surety should not try to deceive the borrower or the lender in any way.
In addition to these duties, the surety may also be required to provide collateral to secure the loan or financial arrangement. This could be in the form of property, assets, or other financial instruments.
Overall, the rights and duties of a surety are an important part of any financial transaction. It is important for both the surety and the borrower to be aware of these rights and duties in order to protect their own interests and to ensure that the transaction is completed successfully.