Recently I was again reminded of the dangers of guarantees and the potential consequences to the guarantors.
A son talked his mother and father into guaranteeing a loan from a bank. The son defaulted on the loan.
The bank called up the loan and there was litigation.
The parents maintained they did not understand that they could lose their home.
A settlement was negotiated whereby the parents transferred the home into the name of the bank but were given a right to occupy the property (their home) until the death of the survivor of them which has now happened. The bank has control of the sale of the property and the court order provided for their estate to receive 10% of the net proceeds of sale.
A lucky outcome for the parents- it could have been a lot worse!