What Is a Release of Personal Guarantee?
A Release of Personal Guarantee is a formal document that frees the guarantor from their obligations under a financial contract, such as a loan or lease. This form is typically used when the original contract is paid off or the terms are otherwise satisfied. Proper documentation is necessary to make the release legally binding, ensuring both parties are clear on their responsibilities. While notarization is not required, it’s highly recommended to help avoid disputes and protect all parties involved.
If the loan or lease is paid off and you want to release the guarantor, use our Release of Personal Guarantee template. If you need to cancel the loan agreement itself, our Release of Promissory Note Form confirms that the loan has been satisfied.
When Can a Personal Guarantee Be Released?
- Loan Repayment Complete: Once the borrower has paid off the loan.
- Debt Transfer: If the loan is refinanced or transferred.
- Voluntary Release by Lender: Some lenders may release the guarantor early if alternative security is provided.
- Other Situations: If the borrower files for bankruptcy or the loan terms change.
How to Write a Release of Personal Guarantee
Whether you’re a borrower, lender, or guarantor, this step-by-step guide will help you draft a clear and legally binding release. Follow these simple instructions to ensure all necessary details are included and the process runs smoothly.
1. Basic Details
- Date: Record the release date, including day, month, and year.
- Guarantor’s Details: Enter the guarantor’s full legal name and address as per the original loan agreement.
- Lender’s Details: Enter the lender’s full legal name and address.
2. Reference the Original Agreement
Link the release to the original loan agreement to avoid confusion:
- Document Title: Enter the title of the original loan agreement.
- Execution Date: Enter the signing date of the original agreement.
- State: Enter the state that governs the loan agreement and the release.
3. Release Terms
State clearly that the guarantor is released from all financial obligations under the loan:
- Release Language: Enter in plain language that the guarantor is no longer liable for obligations under the loan agreement.
- Release Conditions: Enter any conditions for the release (e.g. full loan repayment or replacement guarantor.
4. Signatures and Notarization
This document requires signatures from the guarantor and lender:
- Guarantor’s Signature: Enter space for the guarantor’s signature.
- Lender’s Signature: Enter space for the lender’s signature and date.
- Notarization: Add a notary section for legal validation, enter space for signature and stamp.
5. Optional Recital
Optional recital clause:
“This Release releases the guarantor from all obligations under the original loan agreement effective as of the date of this Release”.
6. Distribute Copies
Once signed and notarized, distribute to all parties involved.
Legal Considerations for Releasing a Personal Guarantee
Before a personal guarantee can be released, it is essential to understand the legal obligations involved. Guarantors should:
- Review the Loan Agreement: Make sure release terms are in the original agreement.
- Get Written Confirmation: A written release signed by all parties involved is required for legal validity.
- Consult a Lawyer: Legal advice to avoid any unintended obligations or liabilities.
Release of Personal Guarantee Sample
Use this sample as a guide to create your own Release of Personal Guarantee. Simply customize it with your details using our template. Once you’re done, you can download your document in PDF and Word formats.
