[Question] Advice needed - Limiting a Surety to a Specific Property

[campsbayrich]

Hi all,

I'm currently purchasing a property into a Pty (Ltd). The bank requires me to sign a surety which is understandable as there is no trading history etc.

The surety has been limited to the amount of the loan plus any interest accrued, which I am happy with.

However there is no mention of it being limited to this specific property purchase or bond account number or anything like that. Does anyone have any experience of this, or advice on what clause should be added to limit it to this specific transaction?

We intend to purchase more properties into this entity over the medium term, and I don't want to create a situation where I now have multiple open ended sureties which could all potentially be applied to one transaction that goes bad in the future.

Any advice would be greatly appreciated.

Thanks

Richard

[HR Solutions]

Yes I agree - you cannot have an open ended surety, neither unlimited surety. I would even want the interest percentage tied down.
I signed a surety agreement years ago for someone else and came off very badly - I was the one that didn't do the due diligence first - my mistake.

[campsbayrich]

The interest percentage is in the terms of the loan agreement, so that isn't really an issue, but I do want to make 100% sure that the surety is limited to this particular transaction. The lawyer attending to it on behalf of the bank said that she hadn't ever heard that request in nine years of doing this. I didn't think it was that unusual a request so I was just checking whether anyone else on the forum had had any success in putting a limitation of this nature into a surety, and if so, how they did it.

Cheers for the input though, and sorry to hear about your previous bad experience with sureties. Absolutely terrifying contracts that can go badly wrong!

[Justloadit]

Yes you can word the surety with what ever you wish, provided the bank accepts the terms and conditions of the surety.
In fact if I am not mistaken, the NCA requires this on any surety.

When I signed a surety for an over draft facility, I specifically requested the bank to limit the surety and the purpose of the surety. They obliged.

[HR Solutions]

Thanks campsbay - it was years ago - moved on and rebuilt

Ps at least the rain has stopped here for a while