The surety bond may be either a private deed , that is to say a document signed directly between the parties or a deed if you decide to use a notary. It involves three people:
- The creditor who may be a lessor or a lending institution
- The debtor who may be a tenant or a borrower
- The solidarity surety itself
In this document a person agrees to pay instead of the defaulter (tenant or borrower in the case of a mortgage).
Bonding is regulated by the Securities Act of which he is a member.
The person who will endorse a third party must meet two conditions:
- Be solvent, that is to say that his income must be sufficient to cope with unpaid monthly rent or loan maturities. In the latter case, the lending institution will verify that the debt ratio is less than 33% of income.
- To be legally capable, that is, not to be placed under guardianship or trusteeship.
Difference between joint and simple guarantees
Understanding the difference between these two practices is essential, because in the case of a joint guarantee, the commitment has the same value as that which binds the debtor to the creditor.
The latter is therefore able to claim the unpaid sums and this before having exhausted all the requests to recover the debts from the person bonded .
Otherwise, the joint and several surety, if it has not waived the benefit of discussion, may require the creditor to first exercise all legal remedies with the defaulter to recover the sums due.
Cases of pluralities of bondholders
In this case, each of the bondholders is in solidarity with all the others. To avoid a single person being prosecuted, it is possible to resort to the benefit of division that allows one of the sureties to ask the creditor that the debts are shared among all.
The benefit of discussion
In the deed of guarantee, the benefit of discussion is a clause that allows the personal surety to require the creditor to exercise all legal remedies with the defaulter to recover the unpaid sums. Thus, it will only be in case of failure that the creditor can turn against the bond.
Warning : banks tend to ask to give up the benefit of discussion to have their hands free. They may then require the guarantor to settle the first unpaid balance in place of the defaulting debtor without having to exhaust the legal remedies, thus saving the potential costs of litigation.
The surety has the right to information on the evolution of his commitment . Thus, if the creditor is a professional, a bank for example, he must send each year a letter indicating the evolution of the claim. He must also warn from the first unpaid.
The same goes for the Banque de France’s commissions in the case of the over-indebtedness procedure. The latter must inform the person liable if a file was established with the services of the Bank of France.
In the case of a rental
It is common for a landlord to require, in addition to the strict criteria for the selection of a candidate, that a third person be a joint guarantor in the event of unpaid rent.
Although it must be recognized that the search for a good tenant is not easy, this practice is however regulated since the Loi Boutin . In fact, the landlord who has taken out insurance of unpaid rent can no longer “double” his guarantee by asking for a joint and several guarantee when the rent is given to an employee.
This possibility is now reserved only for students or apprentices. In case of infringement, the deposit is null and void , the owner can no longer turn against the deposit.
In the case of a bank guarantee
In the case of a loan, a copy of the prior offer must be given to the surety. Since May 1, 2011, the deadline for reflection of the deposit is 15 days for a consumer loan (10 days for a mortgage).
The undertaking stops at the term which has been entered in the deed of guarantee. Thus, in the case of rent, it will stop at the end of the lease either the initial period or the renewal period in the context of a lease.
In the case of a home loan, the cancellation of the joint and several guarantee will be done when the credit is fully refunded.