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A Guarantee Deed is a legal promise where someone (the guarantor) agrees to take responsibility if another person fails to pay a debt or meet their obligations. In Nigerian business practice, these deeds help secure loans and protect lenders by providing an extra layer of financial security.

Banks and financial institutions in Nigeria often require Guarantee Deeds before approving major loans, especially for business financing. The deed must follow specific requirements under Nigerian contract law, including proper signing before a notary public and clear statements about the guaranteed amount and payment terms. This makes it different from informal promises or basic contracts.

Use a Guarantee Deed when lending money to someone and you need extra security beyond their personal promise to repay. This document proves especially valuable in Nigerian business dealings where a third party (like a parent company or wealthy individual) agrees to cover the debt if the primary borrower defaults.

The deed becomes essential for major financial transactions in Nigeria, such as business expansion loans, property development financing, or large equipment purchases. Nigerian banks often require Guarantee Deeds from company directors or shareholders when lending to small businesses, particularly those without extensive credit history or substantial collateral.

• Personal Guarantee Deeds: Used by individual guarantors backing business loans, typically required from company directors or wealthy individuals
• Corporate Guarantee Deeds: Provided by parent companies or affiliated businesses to support subsidiaries' financial obligations
• Limited Guarantee Deeds: Cap the guarantor's liability to a specific amount or percentage of the total debt
• Continuing Guarantee Deeds: Cover multiple transactions over time, common in ongoing business relationships
• Specific Project Guarantee Deeds: Tailored for particular construction or development projects in Nigeria's real estate sector

• Banks and Financial Institutions: Request and hold Guarantee Deeds as security for loans, mortgages, or business financing
• Corporate Directors: Often provide personal guarantees to secure funding for their companies
• Legal Practitioners: Draft and review the deeds to ensure compliance with Nigerian law
• Parent Companies: Guarantee obligations of their subsidiaries or affiliated businesses
• Notaries Public: Authenticate signatures and witness the execution of Guarantee Deeds
• Business Owners: Provide guarantees to suppliers, landlords, or financial institutions

• Party Details: Gather full legal names, addresses, and contact information for both guarantor and borrower
• Loan Specifics: Document the exact amount being guaranteed, interest rates, and repayment terms
• Asset Information: List any specific properties or assets being used as security
• Time Limits: Define the duration of the guarantee and any conditions for termination
• Legal Requirements: Ensure compliance with Nigerian stamp duty laws and notarization rules
• Signature Process: Arrange for witnesses and proper execution before a notary public

• Identification Section: Full legal names and addresses of guarantor, creditor, and principal debtor
• Guarantee Scope: Clear description of guaranteed obligations and maximum liability amount
• Duration Clause: Specific term of the guarantee and conditions for termination
• Payment Terms: Detailed repayment obligations and schedule
• Default Provisions: Consequences and remedies if the principal debtor fails to pay
• Governing Law: Statement that Nigerian law governs the agreement
• Execution Block: Space for signatures, witness details, and notary attestation

A Guarantee Deed differs significantly from a Bank Guarantee in several key aspects, though both serve as financial security instruments in Nigeria. The main distinction lies in who provides the guarantee and how it operates.

• Provider: Guarantee Deeds come from individuals or companies, while Bank Guarantees are issued exclusively by financial institutions
• Enforcement Process: Bank Guarantees typically offer immediate payment upon default, whereas Guarantee Deeds may require legal proceedings
• Cost Structure: Bank Guarantees involve regular fees and charges, while Guarantee Deeds generally don't have ongoing costs
• Risk Assessment: Banks conduct strict due diligence before issuing guarantees, whereas private guarantors may rely on personal relationships
• Documentation: Bank Guarantees follow standardized banking formats, while Guarantee Deeds offer more flexibility in terms and conditions