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LSDefine
Simple English definitions for legal terms
Surety
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A quick definition of Surety:
Surety: A person who promises to take responsibility for someone else's debt. When someone borrows money, the lender may ask for a surety to also sign the agreement. This means that if the borrower can't pay back the loan, the surety will have to pay instead. It's like having a backup plan in case something goes wrong.
A more thorough explanation:
Definition: A surety is a person who takes on the responsibility of paying back a debt if the original borrower cannot. They are often required by financial creditors to sign a loan agreement along with the borrower. Unlike a guarantor, a surety's liability begins as soon as the agreement is signed.
When John wanted to take out a loan to start his business, the bank required him to find a surety. His friend, Sarah, agreed to be his surety and signed the loan agreement with him. If John is unable to pay back the loan, the bank can go after Sarah for the money.
Another example is when a landlord requires a tenant to have a surety before renting out a property. The surety would be responsible for paying any damages or unpaid rent if the tenant fails to do so.
These examples illustrate how a surety takes on the financial responsibility of another person's obligation. They are essentially a backup plan for the creditor in case the borrower cannot fulfill their obligations.