Divorce and Family Law

Guarantees of Spouse's or Partner's Debts

Spouses must be careful not to sign guarantees for the debts of their other half or the other half’s business without being clear of the implications.

The House of Lords is insisting that banks and solicitors should do more to establish that undue influence is not exercised and that the risks of using the family house as loan security are made clear.

The same is true of same-sex couples where the relationship is known.

Since the case of Royal Bank of Scotland v Etridge a bank is put on alert or enquiry when the spouse or partner offers to stand surety.

Not only should the bank insist that the spouse or partner have independent legal advice but also that they attend a private meeting with the bank representative at which the risks are explained.

The same solicitor can act for both parties, but must cease to act if there is a conflict.

The House of Lords also suggested that the solicitor must have all necessary information about the financial affairs of the spouse or partner.

The law cannot totally protect such spouses or partners from undue influence, but the House of Lords has increased the protection available.

Naturally some couples may find that this will prove a strain on their relationship. It is, however, perhaps better for that strain to highlight problems before they become a disaster. When in doubt say “No”!

To discuss your own situation or to make an appointment, contact one of the lawyers in the Matrimonial department, Lisa Bolgar Smith or Eleanor Hoare on 020 7242 7000 or use the Contact Request Form.

© Ambrose Appelbe 2004-2008
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