We are Lawyers, Notaries Public and Commissioners for Oath. Our office is located right across from the Calgary Courts Centre in the downtown core. We have over 20 years of experience providing legal solutions to our clients. 

What is a Personal Guarantee?

In Alberta a Personal Guarantee is an Agreement (a Contract) which obligates the signer (the Guarantor) to answer for the debt of another party.   It is a form of added security obtained by a lender from the third party - the Guarantor. It reduces the lender’s risk associated with the loan because it gives the lender the right to pursue a borrower’s personal assets if your business fails to repay the debt.

There is a variety of instances where you may be asked for a Personal Guarantee.  Some of

these may include Personal Guarantees in relation to:

• Small Business Loans / credit;

• a Business Line of Credit;

• various other credit agreements;

• mortgages to companies;

• mortgages for people who do not qualify without additional security;

• the purchase or sale of a corporation;

• a securities trading account (where options trading is possible);

• a Leases agreement signed by a company or partnership; or

• a credit application for the supply of goods (inventory) or services.

If the borrowing business or tenant company runs into trouble and can’t pay its financial obligation such as a loan or amounts owing pursuant to a lease then the lender or landlord may enforce the businesses obligation against the person who has signed the Personal Guarantee. Personal assets of the Guarantor can be seized and liquidated to satisfy any outstanding amount owing.

Yes - its the law. As of 2015 the Guarantee Acknowledgement Act requires that all Guarantors executing a Personal Guarantee in Alberta:

• consult with an active Lawyer to have that Lawyer explain the Guarantor's rights and obligations under the Personal Guarantee; and

• obtain a Certificate from the lawyer in a form prescribed by the Guarantees Acknowledgement Act Regulations.

The Personal Guarantee has no force or effect until the law is complied with.

GUARANTEE ACKNOWLEDGEMENT ACT (Alberta) 

SECTION 3 

No guarantee has any effect unless the person entering into the obligation 

(a) appears before a lawyer, 

(b) acknowledges to the lawyer that the person executed the guarantee, and 

(c) in the presence of the lawyer signs the certificate referred to in section 4.

SECTION 4

(1) The lawyer, after being satisfied by examination of the person entering into the obligation that the person is aware of the contents of the guarantee and understands it, must issue a certificate in the prescribed form. 

(2) Every certificate issued under this Act shall be attached to or noted on the instrument containing the guarantee to which the certificate relates.