If it is difficult to purchase all at once when starting real estate investment, it is often the case that a loan is taken out and a joint guarantor is basically required as the loan is expensive.The joint guarantor has the same responsibility as the borrower, so you may be confused about who should be the joint guarantor.This time, we will introduce you to a joint guarantor for real estate investment.
table of contents
What is a joint guarantor?
The difference between a joint guarantor and a guarantor
There is a big difference between a guarantor and a guarantor.If you become a joint guarantor without knowing this difference, you may suffer a great loss later.A joint guarantor is a person who receives requests and reminders regardless of the borrower's ability to repay.A guarantor is a person who receives claims and demands when the borrower becomes unable to repay.
Defense of demand, defense of search, defense of discretion
A joint guarantor does not have a demand defense, a search defense, or a discretionary defense.What are the ``defenses of demand, defense of search, and defense of discretion'' that are permitted to guarantors?
demand defense
“Article 452 of the Civil Code When the obligee requests the guarantor to perform the obligation, the guarantor may first request the principal obligor to make a demand. This does not apply when a decision has been received or when the whereabouts of the
In other words, if you receive a request from a financial institution, you have the right to dismiss it so as to demand it from the borrower.However, this does not apply if the borrower is bankrupt or is missing and cannot be collected.
search defense
“Article 453 of the Civil Code Even after the obligee has demanded the principal obligor in accordance with the provisions of the preceding article, the guarantor has proved that the guarantor has the means to pay the principal obligor and that execution is easy. Sometimes the obligee must first execute the property of the principal debtor.”
It is the right to tell the financial institution to seize the borrower's property first, not the guarantor, even if there is a demand.Even if the borrower is in arrears and there is a demand from the guarantor, if the borrower has property, it can be argued that it should be seized first.
Profit of segregation
“Article 456 of the Civil Code If there are several guarantors, the provisions of Article 427 shall apply even if the guarantors bear the debt through separate acts.”
“Article 457 of the Civil Code In cases where there are several obligee or obligor, each obligee or each obligor shall have rights or obligations in equal proportions, unless otherwise indicated. ”
If you have more than one guarantor, you can split the debt with the other guarantors.
As mentioned above, the guarantor has the right to prevent himself/herself from being disadvantaged as much as possible, but the joint guarantor does not have such rights.Even if the borrower has assets, if it is judged that the joint guarantor is easier to collect, they must repay.Even if there are multiple joint guarantors, there is a risk that one person will be selected because it is easy to collect.This is why the joint guarantor is said to have almost the same repayment obligation as the borrower.
Is a joint guarantor necessary for real estate investment?
A joint guarantor is not always necessary for real estate investment, but if you are socially untrustworthy, such as a temporary employee or a contract employee, if the size of the company you work for is small, or if the number of years of service is short, the repayment ratio If the (ratio of repayment amount to annual income) has not been reached, or the property has a low rate of return, there is a high risk that the lender will not be able to make stable repayments, and a joint guarantor may be required.
There are also conditions for joint guarantors so that they can be repaid stably in an emergency.
Conditions for becoming a joint guarantor
The point is the person (legal heir) who is judged to be involved in the real estate rental business, and in many cases, this is the spouse and children of the legal heir.A legal heir who is not a joint guarantor may renounce the inheritance if the borrower dies. You can continue to use it, and you can prevent bad debts.
Joint guarantor risk
The joint guarantor has the same responsibilities and obligations as the borrower.In addition, since the "defense of demand, defense of search, defense of discernment" is not accepted, there are cases where it seems to be disadvantageous for the joint guarantor.Therefore, it is important to be a joint guarantor with the same risk as the borrower, and with a planned margin that you can repay yourself.Also, in real estate investment, even if you are unable to repay, you have assets such as land and buildings, so you can sell them and use them for part of the repayment. The difference is the merit of real estate investment.In case of emergency, it is important to choose a good property at the time of purchase so that it can be paid off by selling.It can be said that the borrower should become a joint guarantor after thoroughly consulting and agreeing on what kind of property the borrower is planning to buy.
What to do if you cannot set up a joint guarantor
In some cases, it may not be possible to set up a joint guarantor.In such a case, you may be able to receive a loan without a joint guarantor by subscribing to a "group credit life insurance" designated by a financial institution.Group credit life insurance is a system in which the insurance company will repay the loan if the borrower dies or suffers a serious disability during the repayment period.It is a safe system for borrowers and their families who have difficulty repaying due to disability because they will take care of the loan repayment while the rental income will continue.
However, there are cases where the upper limit of age and 0.3 to 0.5% interest rate are added, you can not join due to health conditions, and there are no debts, so it is not possible to take measures against inheritance tax, so let's check the conditions of each insurance company.
At Rich Road Co., Ltd., we will consistently support all aspects of investment real estate, from complete beginners to experienced people, from a wide range of real estate selection, loan consultations, post-purchase management, and renovations.
