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Loan Surety Agreement for Germany

Loan Surety Agreement Template for Germany

A German law-governed Loan Surety Agreement (ü󲹴ڳsvertrag) is a legally binding document where a surety provider guarantees the repayment of a loan or the fulfillment of other financial obligations of a principal debtor to a creditor. The agreement must comply with German Civil Code (BGB) requirements, particularly §§ 765-778, and includes specific formal requirements such as written form under § 766 BGB. The document outlines the scope of the surety's obligations, conditions for enforcement, and includes specific consumer protection provisions where applicable. It serves as a critical security instrument in German banking and commercial practice, providing creditors with additional assurance for their lending exposures.

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What is a Loan Surety Agreement?

The Loan Surety Agreement (ü󲹴ڳsvertrag) is a fundamental security instrument in German banking and commercial practice, used when additional security is required for a loan or credit facility. This document is essential when a creditor seeks personal security from a third party to guarantee a debtor's financial obligations. The agreement must strictly comply with German Civil Code (BGB) requirements, particularly regarding form and content. It includes detailed provisions about the scope of the surety's liability, enforcement procedures, and any specific conditions or limitations. Special considerations apply when the surety is a consumer or a family member of the debtor, requiring additional protective clauses and disclosures as established by German Federal Court of Justice (BGH) jurisprudence. The document is commonly used in both commercial and private lending contexts, ranging from large corporate facilities to small business loans and personal credit arrangements.

What sections should be included in a Loan Surety Agreement?

1. Parties: Identification of the creditor, principal debtor, and surety (Bürge), including full legal names and addresses

2. Background: Context of the surety, describing the underlying loan or credit facility and the relationship between the parties

3. Definitions: Key terms used in the agreement, particularly defining the secured obligations and relevant loan documentation

4. Scope of Surety: Precise definition of the obligations covered by the surety, including maximum amount and duration

5. Nature of Surety: Specification of whether it is a temporary or indefinite surety, and whether it is a direct, general, or qualified surety

6. Surety's Obligations: Detailed description of the surety's payment and performance obligations

7. Representations and Warranties: Surety's confirmations regarding their financial capacity and understanding of the obligations

8. Enforcement and Payment Terms: Procedures for demanding payment from the surety and payment arrangements

9. Notices: Requirements and procedures for all formal communications between parties

10. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction of German courts

What sections are optional to include in a Loan Surety Agreement?

1. Multiple Sureties: Required when there are multiple sureties, defining joint and several liability

2. Release Conditions: Include when specific conditions for the release of the surety need to be defined

3. Information Rights: Optional section defining the surety's rights to information about the principal debt

4. Immediate Enforcement Clause: Optional submission to immediate enforcement (sofortige Zwangsvollstreckung) under § 794 No. 5 ZPO

5. Assignment and Transfer: Include when the surety or secured obligations may be transferred

6. Consumer Protection Clauses: Required when the surety is a consumer, including mandatory warnings and explanations

7. Relationship Disclosure: Required when the surety is a family member of the principal debtor, addressing BGH requirements

8. Security Release: Include when specifying conditions for release of other security interests

What schedules should be included in a Loan Surety Agreement?

1. Secured Obligations Schedule: Detailed list of the specific loans, credit facilities, or other obligations covered by the surety

2. Payment Schedule: If applicable, schedule of any periodic payments or specific payment arrangements

3. Related Security Documents: List of other security documents related to the underlying obligation

4. Financial Disclosure Form: For consumer sureties, mandatory disclosure of financial situation and risk assessment

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions




























Clauses



























Relevant Industries

Banking and Financial Services

Commercial Lending

Corporate Finance

Real Estate

Manufacturing

Retail

Construction

Import/Export

Professional Services

Small and Medium Enterprises

Relevant Teams

Legal

Credit Risk

Commercial Banking

Corporate Finance

Compliance

Credit Administration

Risk Management

Treasury

Finance

Business Development

Relevant Roles

Legal Counsel

Credit Risk Manager

Loan Officer

Corporate Banking Manager

Compliance Officer

Credit Analyst

Commercial Banking Director

Legal Director

Contract Manager

Risk Assessment Officer

Banking Relationship Manager

Treasury Manager

Chief Financial Officer

Financial Controller

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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