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Guarantee Deed Template for Indonesia

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Key Requirements PROMPT example:

Guarantee Deed

I need a guarantee deed for a property transaction where the guarantor agrees to cover any financial obligations if the borrower defaults. The document should include clear terms of liability, the duration of the guarantee, and any conditions under which the guarantee can be terminated.

What is a Guarantee Deed?

A Guarantee Deed is a legal document common in Indonesian banking and business that creates a binding security interest between a guarantor and a creditor. When someone takes out a loan, this deed formally commits a third party (the guarantor) to step in and cover the debt payments if the original borrower defaults.

Under Indonesian Civil Code regulations, the deed must be notarized to be legally enforceable. Banks and financial institutions frequently require Guarantee Deeds for business loans, especially when lending to small enterprises or startups. The guarantor's commitment typically stays active until the borrower fully repays the loan or the parties agree to terminate the arrangement.

When should you use a Guarantee Deed?

Use a Guarantee Deed when extending credit to borrowers who lack sufficient collateral or credit history on their own. This document becomes essential for Indonesian banks and lenders making loans to new businesses, startups, or individuals with limited assets but who have financially stable guarantors willing to back their obligations.

The deed proves particularly valuable in family business arrangements, property development projects, and trade finance deals where third-party guarantees strengthen the transaction's security. For maximum protection, execute the deed before disbursing any funds and ensure proper notarization according to Indonesian Civil Code requirements. This timing helps prevent future disputes about the guarantee's validity.

What are the different types of Guarantee Deed?

  • Personal Guarantee Deed: Most common type used by individuals backing business loans, limiting liability to specific assets or amounts
  • Corporate Guarantee Deed: Used when one company guarantees another's obligations, often within group structures or joint ventures
  • Unlimited Guarantee Deed: Covers all present and future debts without financial caps, typically required by banks for major financing
  • Limited Guarantee Deed: Restricts the guarantor's liability to a fixed amount or specific obligations, popular in property transactions
  • Cross Guarantee Deed: Enables multiple parties to guarantee each other's obligations, common in Indonesian business group arrangements

Who should typically use a Guarantee Deed?

  • Banks and Financial Institutions: Require Guarantee Deeds as security when lending to businesses or individuals with limited credit history
  • Notaries: Draft and authenticate the deeds to ensure legal enforceability under Indonesian law
  • Business Owners: Sign as guarantors for their company's loans or obligations, particularly in family businesses
  • Corporate Directors: Execute deeds on behalf of companies providing guarantees within group structures
  • Legal Counsel: Review and advise on deed terms, ensuring compliance with Indonesian banking regulations
  • Property Developers: Use deeds to secure financing for construction projects

How do you write a Guarantee Deed?

  • Identify Parties: Gather complete legal names and details of the creditor, debtor, and guarantor
  • Debt Details: Document the exact loan amount, interest rates, and payment terms being guaranteed
  • Asset Verification: Confirm the guarantor's financial capacity and list specific assets covered
  • Legal Authority: Collect proof that signatories have proper authorization to execute the deed
  • Notary Appointment: Schedule a qualified Indonesian notary for deed execution
  • Documentation: Prepare corporate documents, ID cards, and tax numbers of all parties
  • Draft Review: Use our platform to generate a legally-compliant deed that includes all mandatory elements

What should be included in a Guarantee Deed?

  • Party Details: Full legal names, addresses, and identification numbers of guarantor, debtor, and creditor
  • Guaranteed Obligations: Clear description of the debt or obligations being secured
  • Guarantee Scope: Specific limits of the guarantor's liability and duration of the guarantee
  • Default Provisions: Conditions triggering the guarantee and enforcement procedures
  • Representations: Guarantor's declarations of financial capacity and legal authority
  • Notarial Requirements: Indonesian notary's certification and seal
  • Governing Law: Statement of Indonesian law application and jurisdiction
  • Execution Block: Signature spaces with witness provisions per local requirements

What's the difference between a Guarantee Deed and a Bank Guarantee?

A Guarantee Deed differs significantly from a Bank Guarantee in several key aspects, though both serve as security instruments in Indonesian financial transactions. While a Guarantee Deed involves a third-party guarantor personally promising to cover a debtor's obligations, a Bank Guarantee is issued directly by a bank, offering institutional backing for specific transactions.

  • Security Provider: Guarantee Deeds rely on individual or corporate guarantors, while Bank Guarantees are backed by financial institutions
  • Documentation: Guarantee Deeds require notarization under Indonesian Civil Code, whereas Bank Guarantees follow banking regulations and internal bank procedures
  • Enforcement Process: Guarantee Deeds typically need court intervention for enforcement, but Bank Guarantees can be called on demand
  • Cost Structure: Bank Guarantees involve periodic fees and bank charges, while Guarantee Deeds mainly incur one-time notary fees
  • Risk Assessment: Banks evaluate the applicant's creditworthiness for Bank Guarantees, whereas Guarantee Deeds focus on the guarantor's financial capacity

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