The deficiency guarantee is a special form of guarantee, although it is not regulated under the Civil Code like other types of guarantees. Although the deficiency guarantee is not regulated by law, it is used in the banking sector and recognised by the courts, for example by the Federal Supreme Court. In principle, a guarantor is liable for a loan amount if the borrower does not meet his financial obligations. And this is precisely where the normal guarantee differs from the deficiency guarantee.
There are different shapes
In the case of a deficiency guarantee, a guarantor is only liable if the creditor, as lender, has executed the debt with the borrower. In this case, the default guarantee is decisive, i.e. the foreclosure of the borrower’s assets has been unsuccessful. The execution must include all possibilities, including insolvency and the realisation of all attachable assets of the borrower. If this is the case, the so-called default has occurred and the default guarantee therefore applies. Whereby one must be careful here, as unsuccessful and thus also as failure it is also valid if something could be enforced in the context of the execution, but the sum achieved here is not sufficient. In such a case, liability can also arise, whereby this is then limited to the remaining amount of the debt. This is also referred to as the normal deficiency guarantee; in addition to this form, there is another special form, namely the modified guarantee in the event of default.
This is a modified deficiency guarantee.
A modified guarantee in the event of default contains special provisions. Here there may be substantial differences from the procedure already described. For example, a guarantee can be issued in the case of a The creditor has to enforce the debt comprehensively and long-windedly without having to seize the money at a much earlier point in time. So the payment obligation of the guarantor can begin already with a delay of payment of 3 months by the borrower, or with opening of the insolvency procedure. In the case of a modified guarantee, the time of payment and thus the replacement of the guarantor can therefore start much earlier. Here too, however, enforcement of execution is an essential core which must be fulfilled. Of course, there may also be exclusions or more far-reaching regulations, such as the formation of collateral. But one must also be careful here, not every regulation is also legally tenable. Thus there are also immoral regulations here, as the Federal Court of Justice has already clarified several times in its case law in the past. This includes, for example, the complete waiver of enforcement by the borrower and direct recourse against the guarantor within the framework of default. Such a regulation is immoral and therefore ineffective. In addition, the creditor must always be able to prove that he has taken all measures within the framework of execution. If this is not the case, a claim from the guarantor under the deficiency guarantee is unlawful. As with a normal guarantee, whether it is a normal guarantee or a modified guarantee, there is a transfer of rights should the guarantee be called. After the claim by the creditor, the guarantor has a title against the original borrower in the same amount for enforcement in the assets.