Natwest Bank Manager Signing as witness on personal guarentee ????

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

1. Who signed the deed part above the witness section, was this you and your partner or you and the bank?
2. was the last page signed and sent to the bank by solicitors you instructed?
3. Did the bank manager sign both witness signatures?

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

My partner and I signed and the bank manager witnessed both and signed twice putting the banks address and his occupation as business manager.As this was a second deed we signed in the space of 3 weeks and the documents were for a 15k increase for the business we were advised legal advice was not needed the second time around.

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

As I am looking at it on the face of things, it would seem that it is a valid execution as a deed. If you read the case Logbook Loans v OFT it was stated by the Upper Tribunal (equivalent to the High Court) as to whether or not an employee of the lender who, negotiated and signed on behalf of the lender could sign as a witness or would it be rendered void. Their response was that as previously said the witness does not need to be independent but where a witness attests a signature, it would have to be treated as having been by the individual or it would be invalid - Does the fact that the bank manager sign the deed as a witness and then puts the address of the bank mean that he is signing as an individual or as an agent of the bank? I don't know.

At the moment, I can only see your possible defence being that you were signing under undue influence/duress and/or misrepresentation. If the Guarantee is not validly executed and potentially could be statute barred, then you do not want to be acknowledging/admitting anything to the bank that you owe any money as it could be argued that the time limit for a claim will restart again from the date you admitted.

Have you considered seeking advice from citizens advice or maybe getting a free consultation from a couple of solicitors as to their view? Just because it appears valid does not necessarily mean it is.

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

As I am looking at it on the face of things, it would seem that it is a valid execution as a deed. If you read the case Logbook Loans v OFT it was stated by the Upper Tribunal (equivalent to the High Court) as to whether or not an employee of the lender who, negotiated and signed on behalf of the lender could sign as a witness or would it be rendered void. Their response was that as previously said the witness does not need to be independent but where a witness attests a signature, it would have to be treated as having been by the individual or it would be invalid - Does the fact that the bank manager sign the deed as a witness and then puts the address of the bank mean that he is signing as an individual or as an agent of the bank? I don't know.

At the moment, I can only see your possible defence being that you were signing under undue influence/duress and/or misrepresentation. If the Guarantee is not validly executed and potentially could be statute barred, then you do not want to be acknowledging/admitting anything to the bank that you owe any money as it could be argued that the time limit for a claim will restart again from the date you admitted.

Have you considered seeking advice from citizens advice or maybe getting a free consultation from a couple of solicitors as to their view? Just because it appears valid does not necessarily mean it is.

THANK YOU FOR YOUR HELP.

This is still a grey area then,are you saying that it could have a 6 year time bar as it is an unsecured liability but my partners 12 years because of security even if it is sign as a deed?

It would be great to have some certain advice about the deed but there are so many conflicting arguments.

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

I have not read the agreement fully but let's break this down a bit. First question is whether or not the deed is valid and properly executed, if yes the limitation is 12 years, if not it's 6. The next point to look at will be when the cause of action arose, now having read a little on guarantees, it seems that it is quite usual the cause of action is usually when the bank sends a demand for payment and the clock will start to run from then.

Another argument here could be that if the deed is in fact defective/invalid, in order for the guarantee to be binding on yourself is that it must be a validly formed contract - offer, acceptance, consideration, intention to create legal relations. The problem with the guarantee if it is not a validly executed deed there could be a lack of consideration. For consideration to take place there needs to be something of value that is given in return of a promise, a promise itself has no contractual force.

This is usually why guarantees take the form of a deed as opposed to a simple contract as a deed does not require any consideration.

[MissFM]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

The sequence of events and the timing are a little unclear - you say your partner's property has been repossessed - presumably the proceeds from that didn't cover the sum guaranteed between you?

If you want to challenge the guarantee - or just to get an accurate opinion on whether you do have a challenge worth pursuing and, if so, how to present your case - it really is necessary to consult a suitably qualified solicitor. You need someone with expertise in that area of law, which is a minefield for both sides, who can look at all the specifics of your situation.

Such a lawyer would also be able to say for sure whether the witnessing issue is worth challenging.

Maybe have a look here and see if any of these grounds might apply:

http://mbmcommercial.co.uk/blogs/ban...eing-enforced/

This is also an interesting comment ( http://articles.rollingsons.co.uk/20...antees-on.html )

Guarantors should be aware that, even if the guarantee is legally unenforceable, creditors will vigorously pursue collection and defend the right to collect the amount for several reasons. Creditors have mandatory rejection responses to guarantors who seek to reduce liability in order to ensure the best chance of recovering the amount lent to the principal borrower, and these measures can be difficult for a guarantor to circumvent without legal assistance.

Additionally, creditors will make all efforts to receive money prior to any court action. This could, however, work in favour of the guarantor because, if the creditor believes there is a possibility of setting a judicial precedent that could negatively affect the creditor’s ability to collect in the future or could affect industry standards in a manner perceived as unfavourable, it is more likely they will settle out of court for a lesser amount.

Bear in mind that both of the above are written by solicitors touting for business (there are many more such artices from similar sources) but you do need professional advice sooner rather than later IMVHO, even if it's just for an initial informed assessment of your position. Someone trained and experienced may well see an avenue that has been missed x

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

The sequence of events and the timing are a little unclear - you say your partner's property has been repossessed - presumably the proceeds from that didn't cover the sum guaranteed between you?

If you want to challenge the guarantee - or just to get an accurate opinion on whether you do have a challenge worth pursuing and, if so, how to present your case - it really is necessary to consult a suitably qualified solicitor. You need someone with expertise in that area of law, which is a minefield for both sides, who can look at all the specifics of your situation.

Such a lawyer would also be able to say for sure whether the witnessing issue is worth challenging.

Maybe have a look here and see if any of these grounds might apply:

http://mbmcommercial.co.uk/blogs/ban...eing-enforced/

This is also an interesting comment ( http://articles.rollingsons.co.uk/20...antees-on.html )



Bear in mind that both of the above are written by solicitors touting for business (there are many more such artices from similar sources) but you do need professional advice sooner rather than later IMVHO, even if it's just for an initial informed assessment of your position. Someone trained and experienced may well see an avenue that has been missed x

Thank you for your help,

The signing of the document is another issue and a very grey area there is no specific case law anywhere and in court cases they look at that.

The other issue is that as its a DEED a Joint and several one as the attachment enclosed, where would I stand as my liability is unsecured anyway and the bank repossessed my business partners property back in 2009 again making it unsecured from then so would it be under the 6 year limitation act?

Does the 12 year limitations act apply to security only or as its a deed does that mean secured or unsecured its 12 years??

[FlamingParrot]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

I have not read the agreement fully but let's break this down a bit. First question is whether or not the deed is valid and properly executed, if yes the limitation is 12 years, if not it's 6. The next point to look at will be when the cause of action arose, now having read a little on guarantees, it seems that it is quite usual the cause of action is usually when the bank sends a demand for payment and the clock will start to run from then.

It would be if there was no security, however, in this case a property was repossessed and the proceeds of the sale were used in part payment of the outstanding liability. This is very similar to the typical mortgage shortfall situation where the shortfall becomes an unsecured debt subject to a 12 year limitation period. The Council of Mortgage Lenders have a policy that says:

Anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender for recovery of the outstanding debt, will not now be asked to pay the shortfall.

This is also incorporated into the FCA MCOB rules, which only covers lenders regulated by the FCA. I'm not sure whether this would apply to a repossession arising from a guarantee for a business loan .

Another argument here could be that if the deed is in fact defective/invalid, in order for the guarantee to be binding on yourself is that it must be a validly formed contract - offer, acceptance, consideration, intention to create legal relations. The problem with the guarantee if it is not a validly executed deed there could be a lack of consideration. For consideration to take place there needs to be something of value that is given in return of a promise, a promise itself has no contractual force.

This is usually why guarantees take the form of a deed as opposed to a simple contract as a deed does not require any consideration.

Consideration doesn't figure in guarantees, they are "empty promises" so to speak, since you get nothing in return, which is why they are always executed as deeds.

The signing of the document is another issue and a very grey area there is no specific case law anywhere and in court cases they look at that.

The other issue is that as its a DEED a Joint and several one as the attachment enclosed, where would I stand as my liability is unsecured anyway and the bank repossessed my business partners property back in 2009 again making it unsecured from then so would it be under the 6 year limitation act?

As I said above, this is similar to the typical mortgage shortfall situation where the proceeds of the sale of the repossessed property were not enough to satisfy the debt and the outsanding amount became unsecured but subject to the 12 year rule.

Does the 12 year limitations act apply to security only or as its a deed does that mean secured or unsecured its 12 years??

It's not because it was a deed (all guarantees have to be deeds due to lack of consideration as above), it's related to the security as per s.20 of the Limitation Act 1980: http://www.legislation.gov.uk/ukpga/1980/58/section/20

20 Time limit for actions to recover money secured by a mortgage or charge or to recover proceeds of the sale of land.

(1) No action shall be brought to recover—
(a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal); or
(b )proceeds of the sale of land;
after the expiration of twelve years from the date on which the right to receive the money accrued.

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Many thanks [MENTION=37786]FlamingParrot[/MENTION] So it's 12 years then yes?

[FlamingParrot]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Many thanks @FlamingParrot So it's 12 years then yes?

Sadly it is in these cases. :ohwell:

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Many thanks @FlamingParrot So it's 12 years then yes?

Thank you for your help:

So just to clarify my business partners liability with the property as security would be 12 years and my liability with no security or property would be 6 years ??

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

It would be if there was no security, however, in this case a property was repossessed and the proceeds of the sale were used in part payment of the outstanding liability. This is very similar to the typical mortgage shortfall situation where the shortfall becomes an unsecured debt subject to a 12 year limitation period. The Council of Mortgage Lenders have a policy that says:

This is also incorporated into the FCA MCOB rules, which only covers lenders regulated by the FCA. I'm not sure whether this would apply to a repossession arising from a guarantee for a business loan .

Consideration doesn't figure in guarantees, they are "empty promises" so to speak, since you get nothing in return, which is why they are always executed as deeds.


[/COLOR][/B]As I said above, this is similar to the typical mortgage shortfall situation where the proceeds of the sale of the repossessed property were not enough to satisfy the debt and the outsanding amount became unsecured but subject to the 12 year rule.

It's not because it was a deed (all guarantees have to be deeds due to lack of consideration as above), it's related to the security as per s.20 of the Limitation Act 1980: http://www.legislation.gov.uk/ukpga/1980/58/section/20

I'm sorry FlamingParrot I'd have to disagree on some of your points there, particularly your interpretation of the limitation period (and possibly mine) - unfortunately have no time to go in great detail now but will certainly post my reasons later this evening.

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

I'm sorry FlamingParrot I'd have to disagree on some of your points there, particularly your interpretation of the limitation period (and possibly mine) - unfortunately have no time to go in great detail now but will certainly post my reasons later this evening.

Thank you,

Would it not be as my liability is not secured only my partners that my liability is 6 years?

But it does state on the deed it is joint and several which is pretty unfair as I had no security.

There is the argument that when the house was repossessed in 2009 it would make it a 6 year limitation from then as the liability became unsecured?

[FlamingParrot]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

I'm sorry FlamingParrot I'd have to disagree on some of your points there, particularly your interpretation of the limitation period (and possibly mine) - unfortunately have no time to go in great detail now but will certainly post my reasons later this evening.

Looking forward to hearing them then... opcorn: So you don't think this falls under s.20 of the LA, why wouldn't it if it's like your typical mortgage shortfall? :confused2:

As I previously posted, lenders have agreed not to pursue shortfalls when they've not contacted the debtors in six years, not sure if this applies here. :noidea:

Of course it would be good for the OP if your theories turned out to be right. :thumb:

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Consideration doesn't figure in guarantees, they are "empty promises" so to speak, since you get nothing in return, which is why they are always executed as deeds.

Just to clear this up. There is no legal requirement for a guarantee to be in the form of a deed. A guarantee can take the form of a simple contract but must be in writing How? By virtue of s.4 of the Statute of Frauds Act 1677 (yes it is really this old). Therefore, if the guarantee provided the following clause:

the parties agree to comply with the obligations of this agreement in consideration of payment to each party in the sum of ...

Will amount to a legally binding guarantee in the form of a simple contract, providing that both parties sign - there is no need for a witness to attest.

Now, regarding the limitation period I was pondering this over the weekend and I think we might have strayed off the path a little bit. Whatever FlamingParrot is referring to, I personally don't think it applies nor does The Council of Mortgage Lenders or any reference to mortgages (maybe FCA MCOB rules may apply somewhere but haven't looked into this).

From a legal perspective, this guarantee or alleged deed of guarantee and correct me if I am wrong, does not refer anywhere within the Agreement about mortgages or any other agreement in which the principal debtor has signed. This in my eyes is a standalone agreement as no agreement has been incorporated into it (which would usually be annexed as an exhibit or schedule). I believe my theory is further backed up by clause 10 of the guarantee in which the bank shall send a certificate of the amount owed should the debtor fail to make the payments. Therefore Jarvis cannot be bound by any terms of any other agreement that may have been signed by the debtor - How can you enforce a terms when someone is not a party to the agreement? The simple answer is you can't.

Going back to my previous posts, the issue therefore lies in whether or not this is actually a guarantee by way of a simple contract or it is in fact an executed deed. This will therefore determine the limitation period, either 6 years or 12.

I've noted a few things in the contract:

Guarantee & Indemnity Clause:
The bank has essentially incorporated both a guarantee and indemnity clause.

severance clause:
surprisingly there appears to be no severance clause in this guarantee. A severance clause tends to say that in the event that a particular clause becomes unenforceable then the rest of the agreement shall continue to be in force. A severance clause helps to mitigate the issue that the contract will continue. Arguably, if you were to be successful on grounds of unfair contract term/s then you could also state that as a result of the term being unfair the whole contract is therefore void and unenforceable, relieving you of any obligations.

Guarantors do have rights against the debtor but banks have become wise to this and seek to exclude them as outlined in clause 6.

Variation of the agreement:
another way in which a guarantor may relieve himself of his obligations is where there has been a variation of of the guarantee/deed without the guarantor's consent. Again this can also be excluded which has been done in the agreement under clause 4.

The key issues I see for challenging the guarantee is:
- whether any defences are available
- has the bank proceeded dcorrectly against the guarantor
- does the debtor have any claims against the bank which can reduce the liability of the gurantor
- is there any documented evidence which provides a defence to one of the above

Certainly you could argue some of the terms are unfair under the Unfair Contract Terms Act, dispute that the bank manager signed on behalf of bank and whom have an interested and potentially misrepresenation/undue influence.

If you have strong enough arguments against the bank they may agree to settle or not take it any further forward, depending on how much money is at stake. What you have to realise is that banks do not wish to go to court and have their guarantees scrutinised where there is a grey area or something that hasn't been litigated on before. The reason for this is that should their guarantee be struck down by the court this will obviously set a precedent and affect thousands of other guarantees in which may be held.

My head is rattling with other things that you could say or argue but it probably requires some thought but these are just a few things i've picked up on.

Do you have an actual signed copy of the guarantee as that would be the first thing I'd be asking for.

As anything with law, you will always have conflicting discussions so I'm so there'll be others out there who agree/disagree with me :heh: