Since Jan. 1, 2026, new rules apply around personal securities. This change in the law mainly affects surety bonds issued from then on. This legislative change does not fundamentally alter the previously existing rules regarding surety bonds. However, the existing legislation was modernized and tightened in several areas.
Nevertheless, it is important to take these rules into account, since from now on certain additional obligations will be imposed when one person acts as guarantor for another. We explain the main changes and points of interest below.
1. Presumption of bail
A bail bond is a form of personal security, in which a third undertakes to pay to a creditor the secure payment of an obligation of the principal debtor to the creditor.
For example:
- Person X takes out a loan from person Y
- Person Z may guarantee to person Y the repayment of that loan by person X.
This principle of a bail bond remains unchanged. The new legislation does a presumption of bail arise. Henceforth, any personal security is presumed to be a surety, to which the new legislation applies.
‘Accessory’ and ‘subsidiary’ nature of bail 2.
Accessory
A bail bond is basically accessory to the so-called principal debt. This means that the validity, modalities, extent and continuation of the guarantor's commitment depend on the validity, modalities, extent and continuation of the main.
Applied to our example:
- The guarantor (person Z) will be released if the loan agreement between person X (the borrower) and person Y (the lender) were to be voided.
- Even if person X has proceeded to (partially) repay the loan, person Z will only guarantee the outstanding portion of the loan.
This accessory nature also has the consequence that any subsequent aggravation of the debt incurred by the debtor, in principle no impact has on the size of the surety. If person X, after date when person Z has guaranteed, makes an additional loan to person Y or if the terms of the loan agreement would increase, then person Z will not guarantee that difference.
Finally, this accessory nature leads to the fact that the deposit is in principle can object to all the exceptions to the creditor. In our example, if person X rightly disputes a claim of person Y (for example, because person Z demands repayment of a portion of the loan that was not yet due), then the guarantor Z can also raise this exception against person Y.
In the alternative
In addition to the above, the deposit is also alternatively. Specifically, this means that the guarantor is not obligated to pay until the principal debtor is in absence is.
In our example, person Z will only be liable to pay person Y if person X has not made payment. If person Y puts person X in default of payment, then he is obliged to notify person Z at the same time.
3. Disclosure obligations of the creditor and guarantor
The legislature henceforth expressly provides that the creditor may, at the request of the guarantor immediately notify about the amount of the secured commitment. In our example, person Z can ask person Y at any time what the outstanding amount of the loan is at any given time. In this way, the guarantor can better assess his or her risk position.
Conversely, the guarantor also the principal debtor notify if he intends to pay the creditor. In our example, before proceeding to pay the sum he has guaranteed to person Y, person Z must inform person X of this. This way, person X can communicate whether there would be grounds for dispute.
4. Multiple safeguards
If several sureties have guaranteed the same obligation, the creditor may choose which deposit he addresses. Indeed, those safeguards are severally liable with each other.
In their mutual relationship, the sureties have recourse against each other in proportion to each one's share. Thus, the surety who is called upon to pay by the creditor may have a partial reimbursement obtained from the other guarantors.
5. Right of recourse of the guarantor
A guarantor who has made payment replaces the creditor in relation to the principal debtor. This is called ‘subrogation‘ called.
In our example:
- Person Z, after paying Person Y, is placed in Person Y's position and can demand repayment from Person X.
- If person Y had other collateral (such as a mortgage), then person Z enjoys those collateral equally.
6. Deposit by a consumer
Is the deposit a consumer, then additional rules to protect consumers apply.
Thus, the creditor (person Y in our example) will have to provide the guarantor (person Z) in advance inform regarding, among other things, the size of the claim and the associated risks.
In addition, the creditor must notify the guarantor without undue delay if the principal debtor's repayment obligation would have violated, and the creditor must give the guarantor annually inform on the status of the secured claim.
In our example, person Z will necessarily need to be better informed if he or she is a consumer.
What steps should you take now?
The laws surrounding personal securities, while not changing drastically, do bring a number of focal points and challenges with it. In addition to the previous examples, there are a number of other changes and concerns to consider.
Because the new rules are largely of additional duty are, there may also be deviated of this new legislation. This will only increase the importance of clear and correct agreements where a party is a guarantor.
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