I have a House which a Friend of mine wants to pledge it for a loan for his business ( third party mortgage)
my questions are :- what will be my extent of liability in case of their default to pay interest and principal amount.
who is entitled to receive the loan amount,the firm or the owner of property, i:e me.
can I ask for a share in the loan amount and if it is transferred to my bank account from the company account ,will I be deemed as a debtor of the company ?any further precautions to be taken?I want to help him but don't wan't to land in trouble by doing so.learned experts please advice.
1 Answer from Attorneys
If you are offering your property to be mortgaged as security of loan being taken by your friend or his firm by becoming a guarantor, you will not get any amount of loan in your bank account, the entire amount will be credited in bank account of your friend or his firm. Your liability to repay the loan will be at par with debtor.
In case of default in repayment of loan, your property, which has been mortgaged as security for loan will be auctioned and if the sale proceeds of the auctioned property is less than the outstanding loan amount, remaining amount can be recovered from your other properties, if you had given personal guarantee also.
So take a decision to help your friend considering all the aspects.
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