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Counsel corner: Surety at risk of losing property

About three years ago, I stood as surety for a close friend who took a loan of N2 million naira (two million naira) from a lender. By the agreement between both parties, my friend was to repay N4.5 million (four million, five hundred thousand naira) three months after.

I used a property registered in my company’s name as the surety. As at the time the loan was taken, the value of the property was N20 million (twenty million naira). Unfortunately, when the loan repayment was due, my friend was unable to pay.

The post-dated cheque he wrote was dude cheque. He had been on the run until he was recently arrested  by the police. I discharged myself in the surety but the police said while my friend would bear the criminal responsibility of his action, both of us were involved in the civil aspect.

I advised the police not to release him on bail because he might jump bail. Contrary to my piece of advice, he was granted bail and he has not shown up again. My worry now is that the man who granted him loan has refused to release the documents of my property to me. The property is now worth N36 million (thirty six million naira) and he is actually threatening to sell it to recover his money.

Please what can I do. I need you to advise me.

—Bassey, Port Harcourt.

It is quite unfortunate that a friend you trusted and tried to help could  behave in such an irresponsible manner. One can appreciate the fact that probably, certain circumstances beyond his control made it impossible for him to repay the loan on the due date. But for him to have absconded and he was no where to be found for close to three years speak of an ill motive on his part abinitio.

Ordinarily, debt recovery issue is strictly a civil matter that does not in anyway concern the police whatsoever.

However, issuing a dude cheque to a party is a criminal offence with appropriate punishment prescribed for it in the criminal code.

In that regard, your friend has a case to answer with the police. It is however, noteworthy that the offence is a bailable one and that was why your friend  was granted bail which he is entitled to under the law. I must tell you that he has compounded his offence by jumping bail because that is another crime itself. The civil matter in which you are involved is the fact that you guaranteed the loan he collected with your company’s property. As I said earlier, this aspect does not concern the police.

In standing as surety for him to secure the loan, I’m sure you must have signed some papers which contained some clauses stating the consequences of the borrowers inability to repay the loan. These clauses have binding effects on the loan guarantor which you are in this instant.

It is these clauses that the money lender is trying to enforce against you by threatening to sell the property with which you stood surety.

But I fail to see how accruable interests on N4.5 million from about three years ago will be of the same value with the property which you said is now worth N36 million.

This looks like a case of Shylock. While it is possible that value of property appreciate faster, there is no bank interest rate that would have multiplied N4.5 million to N36 million in three years, except it is a WONDER Bank.

Let your lawyer file an action in a court to recover the company’s property. He should also apply for a restraining order in form of an exparte order preventing the lender from selling the property until the final determination of the substantive suit.


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