Limited Guaranty

Definition

Limited Guaranty. A guaranty which is given up to a given amount or proportion of the loan. Generally specified as a monetary amount and is specified by the lender, so the bank may say 75% of valuation and they only have 60% of valuation available, to an additional limited guaranty would cover the missing 15% up to the point where the primary borrower's equity would meet the standard conditions of the loan. At that point the limited guaranty ceases.

For example in the case of a joint guaranty between school and lender, the school is offering a limited guaranty, i.e. it onlky covers the loan up to a proportion. See alsl (in Aus) family Loan has Family Guaranty. So borrower might provide limited guaranty up to a given amount, for instance primary borrower needs a 100K deposit, only has 50K so the co-borrower (guarantor) would guaranty the deposito but not the whole house. time limit - would come to an end at some point, defined in the contract. This would possibly be defined in the contract terms, not as a defined time but you would contact the bank and ask to be exempted from the stated conditions at such a time as the primary has now met the status to be a borrower i their own right.

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.