Bond agreements

businesswoman giving you the pen and the contract to signWe refer to the so called “contrato de fianzas”. In Spain, These are basically the agreements in which a person undertakes to pay or to comply with a certain obligation on behalf of another person who is not paying or complying.

We refer to the so called “contrato de fianzas”. In Spain, These are basically the agreements in which a person undertakes to pay or to comply with a certain obligation on behalf of another person who is not paying or complying.

There are many specific agreements that are subdivided in their turn into subtypes and modalities.

It seems to be paramount, both for the one who wishes to secure the obligation, and for the guarantor itself, to confirm the financial situation of the main debtor, that is, the one who is obliged to the payment or fulfilment in the first place.

Guarantor  financial risks

To get independent legal advice for this kind of liabilities will help you to avoid any future problems that are sometimes difficult to solve afterwards. It may happen that the guarantor enters into this kind of agreements without having thought too much about it, only because he has a relation of trust or friendship with that person, in most cases a friend or relative. The guarantor however must be informed that, depending on the way the bond has been agreed upon, he/she is finally as much debtor as the main debtor and they take a huge risk with their equity.

Recover bond directly with guarantor

It is even possible, depending on the way the bond has been agreed upon, that, in case of non-fulfilment and in case it is supposed that the debtor has not sufficient financial resources to meet his obligation or it will be difficult to do so, the creditor will immediately claim the debt to the guarantor and his equity and not to the debtor and his assets. The guarantor can only claim back the amount he paid on behalf of the debtor (the known “right of recourse”). But then again, the possibilities are so scarce and bring about costs and complexity. That’s the reason why creditors claim the guarantor and not the debtor!!

Get advice from Arcos & Lamers Asociados

Therefore it is best to get advice from specialized English speaking lawyers in Spain such as those from Arcos & Lamers Asociados, before accepting the liabilities and avoid huge frustrations or claim procedures, court cases and debt recovery claims afterwards.

Contact Arcos & Lamers Asociados.