What is a guarantee? Do you notarize guarantees?

When you sign a guarantee you are agreeing to be financially responsible for someone other than yourself.

Guarantees are generally used by banks and other lenders, when giving out corporate loans. Example: if you have a corporation, and want to borrow money from a bank, the bank may make you sign a guarantee which makes you personally legally responsible for any debts the corporation cannot pay. If the corporation goes bankrupt, the guarantee would allow the bank to seek repayment from you, or whoever signed the guarantee, even though the loan document may be between the bank and the corporation.

A guarantee is a layer of additional assurance that the lender will get its money back. The person signing the guarantee is guaranteeing that the bank/lender has a way to get their money back.

Guarantees are also used in corporate deals where there is a parent company and subsidiary company. Guarantees are often used for point of sale devices (Interac machines). Guarantees are often used for corporate leases.

Alberta has specific legislation to deal with guarantees. The Guarantee Acknowledgment Act is legislation that not only prevents fraud, but which helps lay people avoid taking on significant debts without understanding the debts.

Under the legislation, all guarantees must be signed with a lawyer. The lawyer’s job is to make sure that the person signing the guarantee understands what they are agreeing to and what debt and possible penalties they may be responsible for.

The lawyer will sign a certificate which tells the bank/lender/landlord that the person who signed the guarantee understood what they were doing.

Moto Noto is not a law firm, however we do work with lawyers who can provide the certificate you need to finalize your guarantee. Moto Noto has a free Guarantee Certificate which can be dowloaded here.

At the time of this blog post, the price to sign a guarantee is $175 +GST. Check out our Prices page to stay on top of our current pricing.

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