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On November 23, 2009 my sister-in-law persuaded my husband to be a guarantor for her business. Afterwards, my sister-in-law received a loan from the bank to the sum of 130.000 dollars, whereas the house and the ground land owned by me on basis of an ownership right was pledged with the bank. Meanwhile, my sister-in-law established her own company in Dzoraglukh village, Aragatsotn region and then notified the bank that she was in no condition to redeem the credit liabilities assumed. Afterwards, the bank sent me a notification of exaction which stipulates that in the near future my own house and the ground land will be transferred to a third person for further direct sale thereof. It is true that one should not do somebody a favor. I will have to hand over my house and the ground land created during all my life to another person on account of my sister-in-law.

Hasmik Poghosyan, Yerevan

The application filed by Mrs.Hasmik states that a real property mortgage (hypothec) contract or warranty contract was signed between the bank and her on basis of the credit contract of her sister-in-law. Afterwards, if under the present circumstances there exist certain grounds stipulated by Article 312 of RA Civil Code which stipulate deceit, violence or transaction made as a result of serious consequences, then the transaction under the claim filed by the aggrieved party can become null and void, while if there are elements of crimes then it should be considered as a criminal action with all the legal consequences What concerns the granting of the guarantee, then under the code of law of Mkhitar Gosh and Smbat Gundstabl (Kilikian Armenia) there used to be a special manner of granting guarantees which stipulated further legal consequences of a guarantor. Today’s applicable legal norm,  covering 8 articles, states about the guarantee.

It is necessary to know.

Granting a guarantee for the third person is viewed by the legislation as a type of a transaction in which a guarantor is held liable for non-performance or partial performance of obligations assumed by a creditor in lodging the claim by a respective creditor in compliance with the obligations assumed under the warranty. Prior to granting a guarantee you ought to understand that you do not only do somebody a favor but you are involved in risky transactions by becoming at the first sight a passive party, but in case of the claim of a creditor, you become a debtor who bears a joint and several liability under the law.

Article 378 of RA Civil Law reserves the right to the guarantor to pay a remuneration from the debtor for the services rendered to the debtor (the remuneration amount is free).

In the event the obligations are carried out by a guarantor instead of a debtor, the rights of the given creditor shall pass on to the guarantee, as well as all the damages incurred regarding the liabilities assumed instead of a debtor.

The warranty shall be terminated

a) in case of termination of the liabilities, as well as modification of the liabilities without the consent of a the guarantor,

b) in case of transference of the debt to another person, if there is no consent from a guarantor regarding the assumption of liabilities in respect of another debtor,

c) if a creditor refuses to accept the proper performance suggested by a debtor or the guarantor,

d) when the period mentioned in the warranty contract expires.