What are the implications associated with signing surety?
A surety is as binding as if you had signed for the loan yourself. Unless you are prepared and can afford to repay the loan when the borrower defaults, you should never sign surety. If you do decide to sign surety for a person or your company, make sure that you have a written contract which will allow you to dispose of the asset in order to repay the loan. In addition to this you will need life, disability and possibly critical illness insurance on the person’s life you have signed surety for, as well as on your own life. This will ensure that the loan will be repaid in all eventualities; as if you pass away without cover, your estate is still liable for the suretyship, which could impact on your family and what they expect to receive from your estate. Similarly if you are a director of a company and sign a limited or unlimited suretyship, you are joint and severely liable, which means that you or your estate are liable for the full outstanding loan, regardless of how many directors s
