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Simple English definitions for legal terms
real suretyship
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A quick definition of real suretyship:
Real Suretyship: Real suretyship is when someone agrees to be responsible for a debt or failure of another person, but instead of paying money, they offer a specific property as collateral. This means that if the debtor cannot pay, the creditor can take the specified property instead of demanding money from the surety. Real suretyship is different from personal suretyship, where the surety is responsible for paying damages, and it is created voluntarily or by law.
A more thorough explanation:
Real suretyship is a legal term that refers to a situation where a person assumes liability for a debt or default of another person. This means that if the second person fails to pay their debt, the first person will be responsible for it. Real suretyship is different from personal suretyship, where the surety is answerable in damages.
- John agrees to be a real surety for his friend's car loan. If his friend fails to make the payments, the bank can take possession of the car, but John will not be liable for any damages.
- Real estate can also be used as collateral for a loan, where the lender has a real suretyship over the property. If the borrower defaults, the lender can foreclose on the property.
These examples illustrate how real suretyship works. In both cases, the surety (John and the lender) assumes liability for the debt of another person (John's friend and the borrower). However, in real suretyship, the surety is not liable for damages, but the specified property can be taken as collateral.