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How to save the guarantor and his property?

Kasyanenko & Partners Law Company is able:

  • to completely terminate the relationship between the guarantor and the financial institution;
  • to assist in the process of removing the property from the collateral mortgage obligations;
  • to achieve the lifting of the ban on the alienation of property left as collateral;
  • to protect the right of ownership to any collateral;
  • to stop the process of recovery of collateral for mortgages.

A surety is one of the ways to guarantee to the lender for the fact that another person will regularly fulfill their credit obligations. For the entry into force of the guarantee, it is obligatory to conclude an appropriate agreement between the creditor and the person wishing to become a guarantor. For the current legislation of Ukraine, the guarantor is obliged to be responsible to the Banking institution for the actions of a natural or legal person who received credit funds. It also means that the person, who is the guarantor, has no right to refuse the duties without the consent of the creditor. The guarantor is obliged to reimburse the lender if the person who received the loan does not fulfill or refuses to fulfill its obligations. The fact and conditions of the surety are determined in the surety agreement. Such conditions may include the number of payments, the timing of their implementation, etc.

Today, many Ukrainians who previously vouched for their relatives or friends are obliged to fulfill their credit obligations. What are the possibilities for getting rid of such a burden? Using the information below, you, as a guarantor, will be able to protect your budget from encroachments from the Bank.

The first thing you should pay attention to is the fact of complete termination of the guarantee. Cases for termination of surety obligations are described in article 559 of the Civil Code of Ukraine:

  1. The guarantee may be terminated due to legal circumstances if the financial institution unilaterally (without the participation of the guarantor) changes the terms of obligations and thereby increases the degree of responsibility for their implementation. For example, if the Bank, without the knowledge of the guarantor, increased the interest rate on the loan for the debtor, the guarantee cannot continue.
  2. The guarantee will be terminated if, after the fulfillment of obligations on the part of the debtor or the guarantor, the Bank refused to accept the fact of their proper implementation.
  3. The guarantee shall be terminated if the debt is transferred to another natural or legal person for whom the guarantor has not vouched.
  4. The surety ceases with the death of the surety.
  5. The guarantee will be terminated after the end of the guarantee period specified in the relevant contract. If such a term is not provided, the guarantee will be terminated if, within six months from the date of execution of the principal obligation under the guarantee, the Bank does not present any additional requirements. If such a period is not provided, the guarantee will be exhausted if the Bank does not apply within a year with a claim to the guarantor. The term of one year comes from the date of conclusion of the contract on surety.

As the experience of Kasyanenko & Partners Law Company shows, it is necessary to solve all issues with the Bank and convince it of wrongness only in the courtroom. In our practice, there are cases where the court ruled in favor of the guarantor, completely freeing him from the obligations on the loan of another person.

Specialists of our company are ready to make every effort to save the guarantor from the danger hanging over him in the form of loss of own property for other people’s debts. Thus, Kasyanenko & Partners Law Company specialists were able to achieve a positive decision in favor of our client to terminate the guarantee on two loan agreements (the total amount was more than 250 thousand hryvnias).

Trust Bank, in turn, filed a cassation complaint, in which he pointed out that the decisions of the Pechersk District Court and the court of appeal should be canceled because of violations of procedural law and incorrect use of aspects of substantive law. Lawyers and attorneys of our company were able to provide effective assistance to the guarantor. Thus, the Supreme Court upheld the opinion and arguments selected by our experts to protect the interests of the client. The court denied Trust Bank in the satisfaction of the appeal, thereby leaving the decisions of the courts of previous instances unchanged.

The district court of Kyiv ruled on the suspension of contractual relations between the property guarantor and Industrial and Investment Bank JSC. Given this decision, the mortgage on the land plot was also terminated, and the ban on the alienation of the subject of mortgage-removed. As a result, lawyers of our company achieved suppression of intentions of Bank on repayment of a debt in one and a half million hryvnias by the address on collecting of a subject of a mortgage.

Our companies’ judicial practice shows that disputes on credit agreements and guarantee agreements arise quite often. It is important to note that to help clients, we resort to complex methods of legal and economic analysis of the legal structure of such obligations.

We can confidently say that the specialists of the Kasyanenko & Partners Law Company can help in the termination of relations with the Bank, which arise from the guarantee agreements. This will help to save the property of the guarantor from illegal encroachments on the part of the Banking institution.

The current law of Ukraine On mortgage indicates that the mortgage is nothing more than a legal way to ensure the fulfillment of credit obligations on the part of the borrower. That is, real estate (the subject of the mortgage) remains in the possession of the borrower as long as the mortgagor does not decide to exercise its right to meet its requirements due to the avoidance of the debtor from fulfilling its loan obligations. Such obligations can arise only based on the concluded credit agreement.

The legislation of Ukraine provides for a sufficiently large number of opportunities to counteract the Bank’s requests for foreclosure on the subject of mortgages. These opportunities allow the debtor or guarantor, at least, to delay the process of recovery of the property up to several years and, at most, to achieve the cancellation of obligations and recognition of the loan agreement (surety agreement) invalid. Delaying the process is an effective way to delay the need to pay off the loan and find the financial means to continue to fulfill their obligations.

Kasyanenko & Partners Law Company legal practice.

Kasyanenko & Partners Law Company lawyers and attorneys justified the need to terminate the surety agreement with the following argument. Since the mortgagor is also a property guarantor, the mortgage agreement must be considered as a mixed document, under the terms of which, in the case of a change of obligations unilaterally, the mortgage must be terminated following the Article 559 of the Civil Code.

In that case, if the court fully satisfies such a claim, it leads to the termination of the need to fulfill obligations under the credit (surety) agreement. This, in turn, completely deprives the Banking institution of methods to ensure the fulfillment of the debtor’s obligations.

The judicial practice is often filled with such disputes because of the terms of mortgage contracts. In conclusion, mortgage loans today are among the most problematic in the field of Banking and financial law. But our company can help people who have taken a loan for an apartment, house or land, but now, due to the current situation, can no longer continue to make payments.

The Bank is trying to take your property. How to act?

If you do not want to be left without a place to live, then know that at the moment, the Ukrainian legislation provides a large number of reasons to withdraw your real estate from mortgage obligations:

  1. The law of Ukraine On mortgage Article 17. This article provides grounds for termination of mortgage obligations. The mortgage will be terminated if there is recognition of the mortgage contract invalid. Kasyanenko & Partners Law Company has been helping clients (property guarantors) for many years to protect their property from illegal encroachments of the Bank, to terminate contractual relations with a financial institution, to terminate the process of property surety.
  2. The Law of Ukraine On mortgage Article 48. This legislation gives borrowers or guarantors the right to appeal against illegal actions taken in the process of selling mortgage property. This can be done at any stage of the auction. Even after the auction, the mortgagee, the mortgagor or any other bidder for the sale of mortgaged property in three months has the right to appeal to the court.
  3. Of the Civil Code, Article 652. In this article, it is specified that in case of change of conditions and circumstances under which and based on which the contract was concluded, this contract can be changed or terminated by mutual consent of the parties-participants. However, this does not apply to cases where the Treaty itself provides otherwise.
  4. The Law of Ukraine About protection of the rights of consumers, Article 18. It is provided that the contract may be terminated if it or its terms violate or significantly limit the rights of consumers.
  5. CCU, Article 60. The property which is acquired by spouses in marriage is considered their common property. If one of the spouses enters into a contract relating to the common property and does not submit a written consent of the second spouse, such a contract may be invalidated in court.
  6. CCU, Article 559. The fact of the guarantee is terminated if the credit obligation secured by the guarantee is terminated, or if the terms of the contract are changed unilaterally without the consent of the guarantor, thereby increasing the amount of his direct responsibility.
  7. CCU, Article 225. A legislative act describing the legal consequences after the conclusion of a transaction (contract) by a capable person who was not aware of his actions at the time of conclusion.
  8. CCU, Article 223. A legislative act describing the legal consequences following the conclusion of a transaction by a person whose civil capacity was limited or was beyond the limits of civil capacity.
  9. CCU, Article 227. Description of the consequences of the transaction with the participation of a legal entity, which at that time had no right to commit such an act.
  10. CCU, Article 228. Features of consequences of the transaction breaking a public order and contradicts the interests of the country and society, as a whole.
  11. CCU, Article 229. Legal regulation of transactions made under the influence of the delusion of one of the parties.

All the above information can be used as a weighty legal basis for the recognition of the mortgage agreement invalid. This will help to save the collateral from encroachments by the Bank.

To begin to solve the problem with the Bank-mortgagor, the borrower must collect and provide the following documents:

  1. The Agreement based on which the loan funds were issued;
  2. Additions to the contract;
  3. Mortgage agreement;
  4. Additions to the mortgage agreement;
  5. Loan guarantees agreement;
  6. Possible agreements under the surety agreement and amendments thereto;
  7. Charts provided by the financial institution;
  8. The agreement to restructure, if this is the place to be;
  9. Materials of court disputes (these documents our experts can claim independently, if necessary);
  10. Materials of executive office work (these documents our experts can request independently, if necessary);
  11. Settlement statements of the financial institution (from the moment of conclusion of the contract to the present time).

Dmytro Kasyanenko

Lawyer, managing partner of the Kasyanenko & Partners Law Firm. Since 2002, he has gained extensive legal experience in key positions in business structures and the public sector in the field of law and finance.

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