Guarantees Acknowledgement Act Certificate

Your Calgary lawyer to advise on personal guarantees and Guarantees Acknowledgment Act Certificate.

Personal Guarantee & GAAC  |  Bank Loan  |  Financial Obligation  |  Commercial Lease  |  Car Loan  |  Student Loan

Schedule an appointment with our law firm at 403-400-4092 or Chris@NeufeldLegal.com

What is a Guarantees Acknowledgement Act Certificate? And why do you need to obtain one? These are two key questions that people ask when financing is being sought by another party (individual or corporate entity) and a personal guarantee is being required from them, such that they (the guarantor) must obtain independent legal counsel as to the personal guarantee and the underlying financial obligation, and thereafter have a Guarantees Acknowledgement Act Certificate completed by the lawyer and the guarantor, with respect to that independent legal counsel.

What is a Guarantees Acknowledgment Act Certificate?

A Guarantees Acknowledgment Act Certificate is a unique, legally required document in the province of Alberta, which must accompany certain personal guarantees to make them valid and enforceable. The purpose of the Guarantees Acknowledgment Act Certificate is to ensure that a person giving a personal guarantee fully understands the nature and extent of the financial obligation they are undertaking.

Why do you need to obtain a Guarantees Acknowledgment Act Certificate?

You need to obtain a Guarantees Acknowledgment Act Certificate in Alberta, Canada, because it is a mandatory legal requirement to make a personal guarantee legally valid and enforceable in the province (pursuant to the Guarantees Acknowledgment Act). The primary purpose of the certificate is to protect the individual guarantor by ensuring they properly understand the significant legal and financial consequences of signing a personal guarantee.

What are the key aspects of a Guarantees Acknowledgment Act Certificate?

• Legal Requirement in Alberta: The certificate is mandated under the Guarantees Acknowledgment Act (Alberta), which is intended to protect individuals from unknowingly incurring substantial personal liabilities. This requirement is unique in Canada, with most other provinces relying on common law legal precedent.

• Procedural Requirement: For a personal guarantee to have any legal effect in Alberta, the individual guarantor must:

  • Appear before a lawyer.

  • Acknowledge to the lawyer that they executed the guarantee.

  • Sign the certificate in the presence of the lawyer.

• Lawyer's Certification: The core of the document is the lawyer's formal certification. The lawyer must:

  • Examine the guarantor to be satisfied that the guarantor is aware of the contents of the guarantee and understands it.

  • Sign and issue the prescribed certificate.

• Conclusive Proof: A properly issued Guarantees Acknowledgment Act Certificate is typically considered conclusive proof that the requirements of the Guarantees Acknowledgment Act have been complied with. This means that a lender holding a valid certificate has a strong basis for enforcing the guarantee.

• Consequence of Non-Compliance: If a personal guarantee is signed by an individual in Alberta, and the corresponding Guarantees Acknowledgment Act Certificate is not properly executed, the guarantee is generally considered to have no legal effect and is unenforceable against the guarantor.

Important Note for Guarantors: For anyone considering becoming a guarantor, it's crucial to understand the significant financial responsibility and risks involved. They are legally obligated to fulfill the terms if the primary party defaults, and this can have serious consequences for their own finances and credit history. Consulting with legal and financial professionals before signing a guarantee agreement is highly recommended.

When you are in need of legal representation with respect to the provision of a personal guarantee for another party's indebtedness (i.e., bank loan, debt financing, commercial lease, car loan, student loan), including the proper completion of a Guarantees Acknowledgment Act Certificate, contact Calgary personal guarantee lawyer Christopher Neufeld by email at Chris@NeufeldLegal.com or by telephone at 403-400-4092 to schedule an appointment (including mobile evening legal services).