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Limited Guaranty Note Sample

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There are basically two types of guarantees including limited and unlimited. As it’s obvious from the title that a limited guaranty is only applicable for a specific period of time or amount of money where the unlimited guaranty doesn’t have any boundaries or limitations and it binds the guarantor to be responsible for any kind of liability.

Introduction to the Limited Guaranty Note:

When a debtor or borrower includes a third party in order to get loan from a creditor and give him some assurance that he will return the debt, guarantor is introduced. A guarantor is a third person or party that provides security for the creditor by accepting that if somehow the debtor doesn’t return the debt, the guarantor will. When the guarantor signs the agreement for limited guaranty i.e. for only 6 months or for under amount $50,000, it is known as the limited guaranty in which the agreement has limitations and boundaries.

Brief description of Limited Guaranty Note:

When a debtor wants to secure the rights of the guarantor, limited guaranty is provided to the creditor. This on one hand gives piece of mind to the creditor with the satisfaction that his money will be returned to him either by the debtor or by the guarantor where on the other hand, this note also frees the guarantor in certain situations and conditions that are added by mutual agreement in the limited guaranty note. If the creditor doesn’t fulfill the requirements of the limited guaranty note, the guarantor is no longer obligated or responsible for the debt of the debtor or borrower even if the borrower has denied returning the debt to the creditor. The conditions and limitations of the limited guaranty note depend on each condition and type of debt. For example, a guarantor swears in the guaranty note that he will only provide guaranty if the creditor informs him about the bad debt within 1 year from the date the note is signed or he will only return the debt on behalf of the debtor if the creditor gives him at least 1 month to arrange for the money.

Key elements to include in the Limited Guaranty Note:

  • Name of the debtor with address
  • Name of the creditor with address
  • Name of the guarantor with address
  • Details of the debt (money borrowed by the debtor)
  • Particulars of the return of the debt (i.e. date, schedule and periodic installments if applicable)
  • Personal guaranty by the guarantor
  • Signed statement by the guarantor for the limited guaranty
  • Details of the limited guaranty
  • Date when the note is being signed
  • Signature of all parties

Importance of Limited Guaranty Note:

Unlike unlimited guaranty, the limited guaranty gives certain benefits to the guarantor and he is no longer responsible for unlimited liabilities that might come with his guaranty. For example, by giving limited guaranty, the guarantor states that he will only be responsible on behalf of the debtor if the creditor contacts him within 6 months or he will only give guaranty only if the creditor gives him at least 6 weeks to return the full debt amount on behalf of the debtor.

Here is preview of a Free Sample Limited Guaranty Note created using as fill-able PDF form,


Limited Guaranty Note


Here is download link for this Limited Guaranty Note,


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