A guarantor is an individual, company or institution pledging to make good on a debt or product. Through a legal document known as a guarantee or guarantee, guarantors promise to pay for someone else's debt if the debtor defaults on a loan obligation. A lending institution may require a guarantor for an applicant with poor or not enough credit. A guarantor may also assure consumers of the quality, durability or performance of their merchandise.
Duties of Lease Guarantor
A guarantor on a lease or rental agreement is liable for the performance of another person's obligation. "In the case of a residential rental agreement, the guarantor is obligated to pay the rent (or other monies owed to the landlord) if the tenant fails to do so," according to 1stoplegalforms.com. Laws regarding guarantorship vary by state, and the individual contract guarantee stipulates the time frame and extent of liability for the guarantor. Different types of guarantees may let the guarantor off the hook after a year of on-time payment by the renter, or the guarantor may only promise to cover the tenant as long as they reside on premises.
Duties of Financial Guarantor
On a loan, a guarantor, personally guarantees that payments will be made if the original applicant defaults. The guarantor has no claim to the property that secures the loan, such as real estate, and does not go on the title. "A guarantor is usually called upon if the applicant qualifies incomewise, but has a slight credit blemish or has yet to establish credit," says bankrate.com. A mortgage guarantor will have to carry the entire debt or a specified amount of the debt, depending on the type of mortgage, if the homeowner defaults. If a homeowner cannot meet the payment obligations, the house will usually be sold and the guarantor held responsible for missed payments, as well as any loss associated with the sale, says the financial website.
Duties of Product Guarantor
"The necessity of a guarantee emerged as a means of protection to safeguard the right of the consumer," according to DifferenceBetween.net. A product or service guarantee makes a seller, manufacturer or service provider responsible for complete replacement of merchandise or free servicing, if it's found to be substandard. A guarantee is typically given by the manufacturer and is free of charge, without the need for activation. The product guarantee also prescribes the amount of time for which the guarantor can be held responsible for the products quality and performance after purchase and after guarantee-related repairs.