Sometimes when an organization takes a loan for the purpose of financing a construction project, another organization takes the guarantee of repaying the loan in case the borrower is unable to repay. In such cases a document is drafted, which is known as a construction guaranty agreement.

The parties entering into the agreement are the organization taking the loan referred to as the debtor, the organization taking the guarantee of the loan referred to as the guarantor and the creditor referred to as the lender.

With this document, the lender is assured of his payment. The document also acts as evidence that the guarantor has agreed to repay the loan in the circumstance when the debtor is unable to repay. Various details that are mentioned in the agreement are as follows:

  • The name of the parties involved
  • Address and contact details of the party
  • Loan amount taken and interest charged on it

Time period during which the loan has to be repaid.

Construction Guaranty Agreement

Construction Guaranty Agreement

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