Summary. A personal guaranty converts a business debt into a family problem, using a document most guarantors sign without reading and most lenders draft from a form. Suretyship law gives a guarantor a surprising number of defenses — impairment of collateral, material modification, release of the principal — and modern forms waive essentially all of them, which is why the enforceable scope of those waivers matters more than the defenses. This article covers the anatomy of a guaranty, the distinctions that determine when a lender may sue, the classical defenses and the statutes that survive a waiver, the anti-deficiency and one-action rules that reshape enforcement in several states, and the discrimination rules that void spousal guaranties.

The company signs a $2 million line of credit. At closing the lender slides across a four-page document titled "Continuing Unconditional Guaranty," and the two owners sign it because the loan does not close otherwise.

Four years later the company fails owing $1.4 million. The lender forecloses on the receivables and inventory, recovers $600,000, and sues the owners for $800,000 plus interest, costs, and fees.

The owners raise every defense they can think of:

  • The lender increased the line to $2.5 million in year three without telling them.
  • The lender released the second owner in exchange for a payment when he left the business.
  • The lender let the inventory collateral deteriorate for eight months before foreclosing, and sold it at auction for a fraction of its value.
  • One owner's spouse was required to sign because the lender wanted the house available.

Each of these is a real suretyship defense with a real name. Three of the four are almost certainly waived by the guaranty they signed. The fourth may void the spouse's guaranty entirely under a federal statute the lender's form does not mention.

Sorting out which is which is what this article is about.

What a guaranty is

A guaranty is a promise to answer for the debt or default of another. Three parties, at least conceptually:

  • the principal obligor (the borrower);
  • the obligee (the lender); and
  • the secondary obligor — the guarantor or surety.

Surety versus guarantor. Historically, a surety was primarily liable and could be sued immediately along with the principal, while a guarantor was secondarily liable and could be reached only after the principal defaulted. The Restatement (Third) of Suretyship and Guaranty collapses the distinction into "secondary obligor" and analyzes rights and defenses functionally. Modern guaranty forms make guarantors primarily liable by contract anyway, so the historical distinction rarely decides anything — but the vocabulary persists in the case law and in some statutes.

Consideration. A guaranty given contemporaneously with the underlying loan is supported by the consideration flowing to the principal. A guaranty given later — a lender that discovers a problem and demands one — needs separate consideration: forbearance, an extension, additional credit, or a modification. A guaranty extracted with nothing given in return is vulnerable, and the fix is trivial and routinely omitted.

The statute of frauds. A promise to answer for the debt of another must be in writing and signed by the party to be charged. This is one of the original categories in the English statute and it survives in every state.

The main purpose (leading object) exception. Where the guarantor's main purpose is to secure a benefit for itself rather than to answer for another's debt, the promise is treated as original rather than collateral and is enforceable without a writing. The classic case: a sole shareholder who orally promises to pay a supplier so that shipments continue to the company. Courts look to whether the guarantor received a direct pecuniary benefit. This exception is narrower than desperate creditors hope and broader than guarantors expect.

Anatomy: the distinctions that matter

Payment versus collection

  • Guaranty of payment. The guarantor promises the obligation will be paid. The lender may sue the guarantor immediately on default, without first suing the borrower, without foreclosing on collateral, and without any demand on anyone. This is what lenders draft and what nearly every commercial guaranty is.
  • Guaranty of collection. The guarantor promises only that the debt is collectible. The lender must first pursue the principal to judgment and exhaust execution, or show that doing so would be futile. Rare in practice, and worth asking for; almost never granted.

The distinguishing language is short — "guaranty of payment and not of collection" — and it is the single most consequential sentence in the document.

Absolute versus conditional

An absolute guaranty takes effect on execution with no conditions. A conditional guaranty requires some event: notice of default, demand, exhaustion of collateral. Conditions are construed against the guarantor if the language is ambiguous, and modern forms waive presentment, demand, protest, notice of acceptance, notice of default, and notice of nonpayment, all in one sentence.

Continuing versus specific

A specific guaranty covers a defined obligation — this note, this lease. A continuing guaranty covers a stream of obligations, present and future, including obligations incurred after the guaranty is signed.

Revocation of a continuing guaranty. Absent contrary terms, a continuing guaranty may generally be revoked prospectively by written notice, terminating liability for obligations incurred after the notice while leaving the guarantor liable for everything already outstanding — and, importantly, for future advances the lender is committed to make.

Practical steps for a departing owner: revoke in writing, delivered as the guaranty specifies, keep proof, and confirm in writing what remains outstanding as of the revocation date. And understand that revocation is not release: a guarantor who sells their interest and revokes remains on everything the company already owes, which is usually the whole problem.

Limited guaranties

Limitations that a guarantor should seek and that lenders sometimes grant:

  • A dollar cap — and specify whether the cap includes interest, costs, and attorneys' fees, or whether those are additional. This is worth a real negotiation; an "uncapped for enforcement costs" provision can add 20% to a capped exposure.
  • A percentage of the obligation, particularly where there are multiple owners with unequal stakes.
  • Several rather than joint liability, so each guarantor is liable only for its share. Lenders resist strongly, because joint and several liability lets them collect from whoever is solvent.
  • A time limit or an automatic termination on defined events — a sale of the business, achievement of a financial covenant, replacement collateral.
  • A burn-off tied to performance: the guaranty reduces as the loan amortizes or as the borrower hits coverage ratios.
  • Exclusion of specified obligations — no guaranty of swap obligations, no guaranty of future facilities not yet contemplated.

Springing and "bad-boy" guaranties

Standard in commercial real estate and increasingly elsewhere. The loan is nominally non-recourse, but the sponsor guarantees:

  • Losses caused by defined bad acts — fraud, misapplication of rents or insurance proceeds, waste, environmental liability, failure to pay taxes.
  • Full recourse — the entire debt "springs" into recourse — on more serious triggers, classically a voluntary bankruptcy filing by the borrower, a transfer of the property in violation of the due-on-sale clause, or a violation of the single-purpose entity covenants.

The stakes are enormous and the triggers are often broader than sponsors realize. Courts have enforced full-recourse springing provisions triggered by a borrower's bankruptcy filing, including filings made in response to the lender's own conduct, and by insolvency-adjacent events such as admitting an inability to pay debts. Negotiate the carve-outs carefully: exclude involuntary filings not consented to and not dismissed within a stated period, exclude bankruptcy filings occurring after the lender has commenced foreclosure, and define "misapplication" to exclude good-faith operating decisions.

The classical suretyship defenses

A secondary obligor's liability is derivative, and the law protects it against changes in the deal it agreed to guarantee. The Restatement (Third) and, for negotiable instruments, UCC § 3-605 organize these.

1. Defenses of the principal. The guarantor may generally assert defenses that the principal could assert on the underlying obligation — failure of consideration, fraud in the inducement of the loan, payment, accord and satisfaction, and the statute of limitations. Exceptions: the principal's discharge in bankruptcy and its lack of capacity are personal defenses that do not help the guarantor. That is the whole point of a guaranty and it is worth stating plainly: the borrower's bankruptcy does not discharge the guarantor, and the automatic stay does not protect the guarantor either.

2. Release of the principal. At common law, an obligee's release of the principal discharges the secondary obligor entirely, because it eliminates the guarantor's recourse. A reservation of rights against the guarantor preserves the claim, and modern practice always includes one.

3. Material modification of the underlying obligation. An agreement between obligee and principal that materially modifies the obligation — extending the maturity, increasing the principal, raising the interest rate, changing the amortization — discharges the secondary obligor to the extent of resulting loss or prejudice, and completely where the modification amounts to a substituted contract.

4. Impairment of collateral. Where the obligee has collateral securing the obligation, conduct that impairs its value — failure to perfect, releasing it, allowing it to deteriorate, failing to sell in a commercially reasonable manner — discharges the secondary obligor to the extent of the impairment. This is the defense guarantors most often have real facts to support, because lenders do in fact fail to perfect and do in fact sit on deteriorating collateral.

5. Failure of a condition stated in the guaranty — notice, demand, or the exhaustion required by a guaranty of collection.

6. Statute of limitations, which for a guaranty may run from a different date than for the underlying note, typically from the guarantor's own default in paying after demand.

Waivers, and what survives them

Every commercial guaranty waives every one of those defenses, usually in a single dense paragraph. The general rule is that these waivers are enforceable between sophisticated parties, and courts enforce them routinely. UCC § 3-605(f) expressly permits waiver of the discharge provisions, and the Restatement permits waiver as well.

What limits the waiver:

  • Specificity. A waiver of "all suretyship defenses" is generally effective, but some states require particular defenses to be waived expressly, and courts occasionally read general waiver language narrowly against a lender that drafted it.
  • Good faith. UCC § 1-304 imposes an obligation of good faith in performance and enforcement that cannot be disclaimed, and courts have used it to limit a lender's ability to act in bad faith notwithstanding a waiver — for example, colluding at a foreclosure sale.
  • Commercial reasonableness of a disposition. Article 9's requirement that every aspect of a disposition be commercially reasonable runs to secondary obligors as well as debtors, and UCC § 9-602 makes that requirement non-waivable in advance. A guarantor whose collateral was dumped at an insider auction has a claim regardless of the waiver paragraph, and § 9-626 supplies a rebuttable presumption in non-consumer cases that a non-complying disposition would have satisfied the entire debt.
  • Statutory protections that are non-waivable by their terms — anti-deficiency statutes in some states, and the ECOA rules below.
  • Unconscionability, rarely, and mostly where the guarantor is an unsophisticated individual with no relationship to the business.

The most valuable negotiation for a guarantor is therefore not to strike the waiver paragraph — no lender will agree — but to add affirmative covenants: notice of default to the guarantor with a right to cure, notice before any collateral disposition, and a cap.

Anti-deficiency and one-action rules

Several states, most prominently California, layer statutory protections onto real-estate-secured debt that reshape enforcement against guarantors.

The one-action rule. California Code of Civil Procedure § 726 requires that a creditor holding real property security bring one action, which must first exhaust the security. A lender that sues on the note without foreclosing risks losing its security entirely — the "sanction" aspect of the rule.

Anti-deficiency statutes. California CCP §§ 580a, 580b, and 580d restrict deficiency judgments: § 580b bars deficiencies on purchase-money loans, and § 580d bars a deficiency after a nonjudicial foreclosure. Section 580a imposes a fair value limitation on deficiencies after judicial foreclosure — the deficiency is limited to the debt minus the property's fair value, not minus the (often nominal) foreclosure bid.

How this affects guarantors. A guarantor is not the borrower, so the anti-deficiency statutes do not directly protect it. But if the lender's nonjudicial foreclosure destroyed the guarantor's subrogation rights against the borrower, the guarantor is prejudiced — the reasoning of Union Bank v. Gradsky, which held that a lender is estopped from pursuing a guarantor after a nonjudicial sale that eliminated the guarantor's ability to seek reimbursement.

The lender's response is the "Gradsky waiver" — an express, specific waiver of the rights and defenses arising under §§ 580a, 580b, 580d, and 726, and of subrogation and reimbursement rights, reciting the guarantor's understanding of the consequences. California courts enforce these when they are specific; general waivers do not suffice.

Beware the sham guaranty doctrine. Where the "guarantor" is in substance the borrower — the sole member of a single-purpose borrowing LLC, or an individual who is the true principal with the entity as a shell — California and several other states treat the guaranty as a sham and apply the borrower's anti-deficiency protections. The analysis looks at who really has the economic interest and whether the structure was imposed by the lender.

Other states have their own versions: fair value hearings in New York and a number of others, requiring the court to credit the property's fair market value against the debt; deficiency limitations in Arizona, Montana, North Dakota, and elsewhere; and statutory redemption periods. Any real-estate-secured guaranty requires state-specific analysis, and a form guaranty from another jurisdiction is a liability.

The Equal Credit Opportunity Act problem

The Equal Credit Opportunity Act prohibits discrimination on the basis of marital status, and Regulation B, 12 C.F.R. § 1002.7(d), implements it: a creditor may not require the signature of an applicant's spouse on a credit instrument where the applicant qualifies individually under the creditor's standards.

How the violation arises in practice. A lender approves a business loan on the strength of the company and one owner, and then asks that owner's spouse to sign a guaranty "for the house." That is precisely the prohibited conduct if the applicant qualified without the spouse.

What a lender may lawfully do: require all owners of a closely held business to guarantee, without regard to marital status, applying the requirement uniformly. Require additional collateral or a creditworthy co-signer of the applicant's choosing where the applicant does not qualify alone. What it may not do is single out the spouse.

The remedy question. Whether a spouse-guarantor may assert an ECOA violation as a defense to enforcement, or only as an affirmative claim, has divided courts, because Regulation B defines "applicant" to include guarantors while the statute defines it as a person who applies for credit. The Supreme Court took up the question in Hawkins v. Community Bank of Raymore, 577 U.S. 113 (2016), and affirmed by an equally divided Court, leaving the split intact. The Sixth Circuit in RL BB Acquisition, LLC v. Bridgemill Commons Development Group, LLC, 754 F.3d 380 (6th Cir. 2014), held that guarantors are applicants and may raise the violation defensively; the Eighth Circuit held otherwise in Hawkins.

Practical consequences on both sides. For lenders: apply guaranty requirements by ownership percentage and role, document the credit analysis showing whether the applicant qualified alone, and never say "we need your spouse to sign." For guarantors: this is one of the very few arguments that can void a guaranty outright, it is not waivable, and it should be investigated in every case where a non-owner spouse signed.

Rights running the other way

Guaranties are one-sided documents, but the law gives the guarantor several rights against the principal and against co-guarantors. Most are waived in favor of the lender until it is paid in full — a subordination that is standard and appropriate — but they matter enormously after payment.

  • Reimbursement (indemnity). A guarantor who pays may recover from the principal.
  • Subrogation. On full payment, the guarantor steps into the obligee's shoes, including as to collateral and priority. A guaranty that waives subrogation permanently, rather than until payment in full, should be resisted — it converts the guarantor's payment into a gift.
  • Exoneration. An equitable action to compel the principal to pay before the guarantor is called upon, available where the debt is due and the principal is able to pay.
  • Contribution among co-guarantors. A guarantor who pays more than its share may recover the excess from co-guarantors, pro rata unless they agreed otherwise. Co-guarantors should sign a separate contribution agreement at closing specifying shares, treatment of a co-guarantor's insolvency, and rights if one settles separately with the lender. Almost nobody does this, and the resulting litigation among former partners is bitter and expensive.
  • Rights against collateral posted by the principal, through subrogation.

Enforcement mechanics

Where and how a lender collects:

  • Sue on the guaranty as a separate contract claim. Because most guaranties are absolute guaranties of payment with waivers of demand and notice, the claim is typically ripe on the borrower's default and is well suited to summary judgment — the elements are the guaranty, the underlying default, and the amount.
  • Motion for summary judgment in lieu of complaint, available in New York under CPLR 3213 for an instrument for the payment of money only, and in analogous accelerated procedures elsewhere. This can produce a judgment in weeks.
  • Prejudgment attachment, available in many states on a showing that the defendant is dissipating assets or that the claim is for a liquidated sum.
  • Confession of judgment. A guarantor's advance authorization for entry of judgment without notice. Prohibited or sharply restricted in many states, and prohibited entirely in consumer credit contracts by the FTC Credit Practices Rule, 16 C.F.R. Part 444. Confessions of judgment against commercial guarantors remain available in a shrinking number of jurisdictions and have attracted legislative attention after abuses in the merchant cash advance industry.
  • Attorneys' fees, if the guaranty provides for them — and it should, because most states follow the American rule absent a contract.

Collecting from an individual is a different exercise from collecting from a company. Homestead exemptions, tenancy by the entirety in states that recognize it for real property (which can put a jointly held home beyond the reach of one spouse's creditor), retirement account protections, and wage garnishment limits under the Consumer Credit Protection Act all apply. A judgment against a guarantor whose principal assets are a homestead and a 401(k) may be worth very little — a fact that should inform the credit decision at origination rather than being discovered afterward.

The fraudulent transfer angle. Guarantors facing a call frequently transfer assets — the house to a spouse, the brokerage account to a trust, the LLC interest to a child. These are avoidable under the Uniform Voidable Transactions Act, with a four-year reach-back and badges of fraud that are easy to plead. A guarantor contemplating asset protection should understand that planning done after the guaranty is signed and while trouble is foreseeable is not planning; it is evidence.

Upstream and cross-stream guaranties raise their own fraudulent transfer issue: a subsidiary guaranteeing a parent's debt receives no direct value, and the guaranty may be avoidable in the subsidiary's bankruptcy unless indirect benefit is shown. Savings clauses purporting to cap the obligation at the maximum non-avoidable amount have been rejected. Document the actual benefit at closing.

For the guarantor: a negotiation list

In rough order of value, and recognizing that most lenders will grant two or three of these and not the rest:

  1. A dollar cap, stated inclusive of interest, costs, and fees.
  2. Several liability limited to ownership percentage, rather than joint and several.
  3. A burn-off or release trigger — a sale, a refinancing, defined coverage ratios maintained for defined periods.
  4. Notice of default and a right to cure before the guaranty is called.
  5. Notice before any disposition of collateral, and a right to bid or to purchase the loan at par.
  6. A cap on the underlying obligation guaranteed — this facility only, not future facilities.
  7. A requirement that the lender first apply the proceeds of collateral before demanding payment. Rarely granted, but sometimes softened to a covenant to pursue collateral diligently.
  8. Exclusion of the spouse, and confirmation in writing that no spousal signature is required.
  9. Preservation of subrogation and contribution rights after payment in full.
  10. A contribution agreement among co-guarantors, signed at closing.
  11. A carve-out from any springing recourse for involuntary bankruptcy filings and for actions taken at the lender's direction.
  12. Jury trial and venue terms examined rather than accepted — a jury waiver is generally enforceable, and venue in the lender's home state adds real cost.

And one item that is not a negotiation point but a discipline: know what you have signed. Maintain a schedule of every outstanding personal guaranty — obligor, obligee, amount, cap, termination triggers, and the document location. Owners of several businesses routinely cannot state their aggregate personal exposure, and the number is often larger than their net worth.

For the lender: a drafting checklist

  • Guaranty of payment and not of collection, absolute and unconditional.
  • Continuing, covering all present and future obligations, with defined revocation mechanics.
  • Joint and several where there are multiple guarantors.
  • Comprehensive waivers: presentment, demand, protest, notice of acceptance, notice of default, all suretyship defenses, defenses arising from modification, release, or impairment of collateral, and — in real-estate states — the specific statutory waivers those states require.
  • Reservation of rights against guarantors in any release of the principal.
  • Subordination of the guarantor's subrogation, reimbursement, and contribution rights until payment in full in cash.
  • Reinstatement if any payment is avoided as a preference or fraudulent transfer.
  • Financial reporting covenants from the guarantor — annual personal financial statements and tax returns — with a negative covenant against transferring material assets.
  • Attorneys' fees, costs, and enforcement expenses.
  • Governing law, venue, jury waiver, and service of process provisions.
  • Confirmation of separate consideration where the guaranty is given after closing.
  • A file memorandum documenting the credit analysis showing whether the applicant qualified individually, dated at approval — the single best defense to an ECOA claim.
  • No spousal signature requirement, ever, as a matter of policy.

The honest closing note

Guaranties exist because information is asymmetric. The lender cannot see inside the business, cannot monitor daily decisions, and cannot be sure that the owner who controls the company has any real stake in its survival. Requiring the owner to put personal assets behind the debt solves that problem elegantly: it aligns the owner's incentives with the lender's, and it is cheaper than the monitoring that would otherwise be necessary. Small business credit would be considerably scarcer and more expensive without them.

That justification is real, and it does not make the experience of being called on one any easier. The guarantors in the opening example signed a form at a closing table while the loan proceeds were waiting, and four years later they are litigating waiver language they never read.

The practical advice for owners is simple and mostly ignored: treat the guaranty as the most important document in the loan file, negotiate it before the closing is scheduled, ask for a cap and a burn-off, keep a schedule of what you have outstanding, and revoke in writing the day you leave a business. None of that eliminates the exposure. All of it makes the exposure something you chose rather than something that happened to you.

Guaranties outside the bank loan

The document has migrated well beyond commercial lending, and the analysis shifts with the context.

Commercial leases. A landlord's guaranty from a principal is standard for a new or thinly capitalized tenant, and the two negotiated terms are the cap and the good guy clause. A good guy guaranty limits the guarantor's exposure to rent accruing through the date the tenant actually vacates and surrenders the premises broom-clean with all rent current — it does not guarantee the balance of the term. In exchange the landlord gets a tenant that leaves quickly and cleanly rather than holding over through an eviction. It is one of the few genuinely balanced provisions in commercial real estate and it is worth asking for by name.

Equipment leases and vendor financing. Typically absolute guaranties with the same waiver architecture as bank paper, but frequently with a remarketing provision that determines how the equipment's residual value is credited. Insist that the guaranteed amount be reduced by the equipment's fair market value rather than by whatever the lessor's remarketing agent obtains.

Trade credit. Suppliers extending open account terms often take a short personal guaranty on the credit application, and the guarantor may not realize the signature block above their name is a guaranty at all. These are enforced when the language is clear and the signer's capacity is identified, and defeated when the document is ambiguous about whether the individual signed personally or as an officer. Sign with a clear title and entity name if you do not intend to guarantee, and read the small print above the signature line — the guaranty is frequently one sentence in a paragraph about credit terms.

Construction and performance. Distinguish a guaranty from a surety bond. A payment or performance bond issued by a corporate surety under 40 U.S.C. §§ 3131–3134 (the Miller Act) or a state Little Miller Act is a regulated instrument with its own claim procedures and notice deadlines, and the surety has indemnity rights against the principal and its owners under a general indemnity agreement signed at the time the bond line was established. Contractors' owners routinely sign those indemnity agreements without appreciating that they are personal guaranties of every bonded project, present and future.

Franchise agreements. Franchisors nearly always require personal guaranties from franchisee owners covering royalties, advertising fund contributions, and post-termination obligations including non-competes. The guaranty typically survives transfer of the franchise unless expressly released — a point departing franchisees miss.

Merchant cash advances and alternative finance. These agreements are structured as purchases of future receivables rather than loans, and the "personal guaranty of performance" is drafted to be triggered by conduct rather than by non-payment, precisely so that the transaction avoids characterization as a loan subject to usury limits. Several states have enacted disclosure statutes for commercial financing, and courts have recharacterized some of these arrangements as loans where the reconciliation provisions were illusory. Any owner asked to sign one should have it reviewed before, not after.

Estate and divorce consequences

Two downstream effects deserve mention because they surface long after the loan closes.

Death of a guarantor. A continuing guaranty ordinarily does not terminate on the guarantor's death as to obligations already outstanding, and many forms provide that it continues as to future advances until the lender receives written notice. The claim becomes a claim against the estate, and it must be presented within the state's non-claim period — which is short, often three to six months from notice to creditors, and which cuts off claims not presented. Executors of a business owner's estate should search for outstanding guaranties before making distributions, because a distribution made ahead of a presented claim can expose the fiduciary personally.

Divorce. A marital settlement agreement allocating a guaranteed debt to one spouse does not bind the lender. The non-assuming spouse remains fully liable on the guaranty and will be sued if the assuming spouse defaults, with only an indemnity claim against a former spouse who by then is usually insolvent. The protections are to require refinancing or a lender release as a condition of the settlement, to secure the indemnity with a lien on property the assuming spouse retains, or to hold escrowed funds until the obligation is retired. This is among the most common and most avoidable financial injuries in the divorce of a business-owning couple.

Primary authority

Suretyship is one of the last areas where the Restatement genuinely governs, and where the statutory overlay is mostly consumer protection.

  • Restatement (Third) of Suretyship and Guaranty §§ 1, 21–23, 37, 39–44, 48 — the definition of secondary obligation, the duties of the obligee, impairment of recourse, and the suretyship defenses that a waiver clause is drafted to eliminate.
  • UCC § 3-419 — accommodation parties on a negotiable instrument, and § 3-605 — discharge by release, extension, or impairment of collateral, the statutory cousin of the common-law defenses.
  • UCC § 9-602 and § 9-624 — which secured-party duties can be waived and which cannot, including the limits on waiving the commercially-reasonable- disposition requirement in § 9-610 and § 9-611.
  • UCC § 9-616 — explanation of a surplus or deficiency, and the sanction in § 9-625 for getting it wrong.
  • 15 U.S.C. § 1691(a)(3) and 12 C.F.R. § 1002.7(d) — the Equal Credit Opportunity Act spousal guaranty rule, and the source of the most common affirmative defense in a small-business guaranty case.
  • 16 C.F.R. Part 444 — the FTC Credit Practices Rule, which bars confessions of judgment and certain waivers in consumer credit obligations.
  • Uniform Commercial Real Estate Receivership Act and state one-action and anti-deficiency statutes — for example Cal. Civ. Proc. Code § 726 and § 580b — which decide whether a guarantor can be pursued after a foreclosure.
  • Cal. Civ. Code §§ 2787–2856 — the statutory suretyship defenses and the language California courts require to waive them, the most developed body of waiver law in the country.
  • 11 U.S.C. § 524(e) — the discharge of a debtor does not discharge a guarantor, which is the entire commercial point of a guaranty.

Related articles

This article is provided for general informational purposes and does not constitute legal advice. Suretyship law, anti-deficiency statutes, one-action rules, confession of judgment rules, and exemption law vary substantially by state, and courts are divided on the availability of an ECOA defense to guarantors. Consult qualified counsel before signing, drafting, or enforcing a guaranty.