A security deposit must be released from its obligations if, during the realization of the guaranteed assets, a creditor negligently fails to collect all the amounts due to them.
A person who guarantees a debtor expects the creditor to act diligently so as not to worsen the risks they incur.
Thus, a guarantor, following the negligence of a first-ranking creditor to renew their guarantee in the personal property registry, is forced by the court to pay the full amount of this guarantee on the pretext that the guarantor would still have been obligated to honor the debt to the second-ranking creditor, who was fully reimbursed due to this negligence of the first-ranking creditor.
The guarantor argues before the Court of Appeal that they would not have had to pay the amounts owed under their guarantee had it not been for the negligence of the first-ranking lender to timely renew their mortgage in the personal property registry. The Court of Appeal upholds the guarantor's opinion. It concludes that, without their negligence, the first-ranking creditor would have collected all the amounts due to them when the assets were realized, thus releasing the guarantor from their obligations.
If the misfortune of some occasionally brings happiness to others, the negligence of some sometimes results in the severity of others.
*C.A. 500-09-008173-999
