A bond or suretyship is an undertaking by a person to take the place of the debtor in the event that the debtor does not repay the debt. It is a unilateral contract by which a third party (natural or legal person) guarantees compliance with an obligation
He undertakes to the creditor to fulfill this obligation if the debtor does not satisfy it.
Two types of bonds exist: simple bonding and bonding. With a simple bond, the lender can bring an action only after suing the principal debtor in default of repayment. For a joint and several guarantee, the creditor may directly return to the debtor’s surety to demand repayment of the credit, without having to wait until he has used all the remedies against the debtor.
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When you buy a home loan to finance the purchase of real estate, you can choose between a bank guarantee and a mortgage or lien money lender, which offers the benefit of being exempt tax. The bank guarantee or surety is offered and insured by banks, insurance companies and professional mutuals. From one organization to another, and depending on the principal borrowed, the amount of the monthly payments as well as the age of the borrower, the proposed financial conditions may vary. It is following the nonpayment of three or four deadlines by the debtor that the surety must pay the lender. It can get closer to the borrower in order to agree on an amicable solution. In the event that there is no possible outcome, the surety agency can first proceed to a legal mortgage registration at the expense of the borrower and then have the property financed or seized in order to get a refund.
Established by a notary and published in the Mortgage Retention, a mortgage or lien of money lender is a classic collateral granted by a borrower on real estate. A mortgage registration is valid for the duration of the credit, and for one more year (can not exceed 35 years). In the event of repayment default of the borrower and that no amicable solution is found, the lender can seize the property then sell it.
In consideration for a surety bond offered by a surety agency, the borrower must pay:
- A bonding commission representing a lump sum or a percentage of the borrowed capital.
- A contribution to the Mutual Fund, a specialized agency that acts as guarantor. In the event of default by the borrower, it is this institution which is responsible for reimbursing the bank, before turning against the defaulting borrower.