A release of personal guarantee form is a formal agreement that releases the guarantor from the obligations of a financial contract. Proper documentation is required for the release to be legally binding. Notarization is not required but recommended.
When Can a Personal Guarantee Be Released?
- Loan Repayment is Complete: Once the borrower has fulfilled all obligations, including loan repayment.
- Debt Transfer: If the loan is refinanced or transferred, the guarantor may be released.
- Voluntary Release by Lender: Some lenders will release a guarantor early if alternative security is provided.
- Other Situations: If the borrower goes bankrupt, the loan terms are re-negotiated or the guarantor exits a business in the case of business loans.
How to Write a Release of Personal Guarantee
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
You can download a release of personal guarantee template below in PDF or Word format.
