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Signing suretyships

17 November 2005

Be aware of the implications if asked to provide surety for a mortgage loan on behalf of a relative or a friend - because you might just find yourself being liable for debts incurred by a debtor which you didn't know about and which are unrelated to the loan one originally stood surety for, according to Anton de Leeuw, CEO of property educationalists YDL.

"The problem lies with the common practice amongst banks of making loans conditional upon the signing of an unlimited suretyship agreement", says de Leeuw and, despite the South African Banking Code not prohibiting such sureties, clients have a right to refuse them except where the limited suretyship does not provide adequate suretyship to the bank.

Most of South Africa's big banks inform their clients that it would be in their best interests to consult a lawyer before signing surety. "But abuse seems widespread, with many people complaining that they were not properly informed of the implications," says de Leeuw.

Article on Rodneyhayter.com

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