A guaranty is a contract under which one person agrees to pay a debt or perform a duty if the other person who is bound to pay the debt or perform the duty fails to do so. A guaranty of the payment of a debt is different from a guaranty of the collection of the debt. A guaranty of payment is absolute while a guaranty of collection is conditional.
The Oregon Guaranty of Collection of Promissory Note is a legal document that provides a secure guarantee for the collection of a promissory note in the state of Oregon. It acts as a form of protection for lenders or creditors, ensuring that they have recourse to recover the amount owed in case the borrower defaults on their repayment obligations. This document establishes a guarantee agreement between the creditor or lender (known as the "guarantee holder") and a third party (known as the "guarantor") who agrees to be held responsible for the debt if the borrower fails to fulfill their payment obligations. The Oregon Guaranty of Collection of Promissory Note often includes essential details such as: 1. Parties involved: It clearly identifies the guarantee holder, the borrower, and the guarantor. Each party's contact information, legal names, and addresses are specified to ensure accurate identification. 2. Promissory note details: The document contains comprehensive information about the promissory note being guaranteed, including the principal amount, interest rate, repayment terms, and maturity date. These terms are crucial as they define the lender's rights and the borrower's obligations. 3. Guarantee clause: The guarantee clause outlines the guarantor's commitment to fulfilling the borrower's obligations if they default. It indicates that the guarantor accepts liability for the principal, interest, and any other costs associated with the overdue amount. 4. Collateral details (if applicable): Sometimes, the guaranty may be secured by collateral that the borrower provides as additional assurance. This could include real estate, assets, or any other tangible property that the guarantor can claim ownership of in case of default. Types of Oregon Guaranty of Collection of Promissory Note: 1. Absolute Guaranty: An absolute guaranty makes the guarantor fully liable for the entire debt, including principal, interest, and any other costs incurred by the guarantee holder. It offers stronger protection for lenders and is commonly used in commercial or larger loan transactions. 2. Limited Guaranty: A limited guaranty, on the other hand, specifies certain limitations or conditions under which the guarantor's liability is triggered. This could include a maximum liability amount, a specific time frame, or certain events that would result in the guarantor assuming responsibility. 3. Continuing Guaranty: A continuing guaranty remains in effect until the promissory note is fully paid off or discharged, even if the guaranteed debt has been refinanced, extended, or modified. This ensures ongoing protection for the guarantee holder throughout the lifespan of the loan. As with all legal documents, the Oregon Guaranty of Collection of Promissory Note should be drafted and reviewed by competent legal professionals to ensure its compliance with Oregon state laws and to address specific circumstances adequately.
