Joint and several surety
A joint and several surety is a commitment by which a natural or legal person — the surety — undertakes to repay a borrower's debt to a lender if the borrower defaults, without the creditor being required to pursue the principal debtor first. It is one of the two main categories of personal security used in mortgage lending.
Key points
- The creditor may call on the surety directly without first pursuing the borrower (solidary nature).
- In mortgage lending, surety is commonly provided by a mutual guarantee organization (e.g., Crédit Logement, SACCEF) rather than a private individual.
- Surety fees are generally lower than mortgage registration fees and may be partially refunded at loan maturity depending on the provider.
- A surety may be simple (benefit of discussion) or joint and several; in banking practice, the joint and several form is standard.
- The surety who pays is then subrogated to the creditor's rights and may recover from the borrower.
Frequently asked questions
What is the difference between a joint and several surety and a mortgage?
A mortgage is a real (in rem) security: it encumbers the property itself, allowing the lender to seize and sell it upon default. A joint and several surety is a personal security: the surety's own assets (or a mutual guarantee organization's pooled funds) back the debt, not the property directly. A surety arrangement is often cheaper and quicker to set up, but it does not protect the lender against a fall in the financed asset's value.
How does a mutual guarantee organization like Crédit Logement work?
The borrower contributes to a mutual guarantee fund at loan disbursement. If the borrower stops repaying, the organization settles the installments with the lender and then pursues the borrower through amicable or legal recovery. A portion of the fund contributions may be returned to the borrower when the loan is fully repaid, depending on fund performance and contractual terms.
What happens if the surety cannot pay on the borrower's behalf?
When the surety is an insolvent individual, the lender is in the same position as if it held no security over the property. This is why banks typically require a surety whose financial standing has been verified, or prefer professional guarantee organizations with adequate reserves. If the surety is demonstrably insolvent, the lender may still initiate foreclosure proceedings if a supplementary mortgage was also taken as security.
In practice
A couple seeks financing for a €320,000 primary-residence purchase. The bank proposes a Crédit Logement surety instead of a conventional mortgage. The mutual fund contribution amounts to €2,800 (partly refundable), versus approximately €3,500 in notarial mortgage registration fees. The broker highlights this option, pointing out the upfront saving and the partial refund at loan maturity.
Official sources
- Article 2290 of the Civil Code (simple or joint-and-several suretyship) · Légifrance
- Mortgage credit (official guide) · Service-Public.gouv.fr
- Housing and financing information · ANIL