When a party defaults on a secured obligation, the creditor may seek to satisfy the debt by foreclosing on the collateral securing the obligation. In some cases, the collateral may not be owned by the debtor but rather by a third party who has provided a counter-surety for the debtor's obligation.
A counter-surety is a person or entity that provides security for another person's or entity's obligation. The counter-surety's obligation is typically secondary to that of the primary obligor, meaning that the counter-surety is only liable if the primary obligor defaults. In the context of secured transactions, a counter-surety may provide a counter-surety agreement, counter-surety deed, or other form of security interest in its property to secure the primary obligor's debt.
The question of whether a creditor can execute directly on counter-surety property is a complex one that depends on a number of factors, including the terms of the counter-surety agreement, the governing law, and the specific circumstances of the case. In general, however, a creditor cannot execute directly on counter-surety property without first obtaining a judgment against the primary obligor.
There are a few exceptions to this general rule. For example, in some jurisdictions, a creditor may be able to execute directly on counter-surety property if the primary obligor is insolvent or if the counter-surety has waived its right to notice and a hearing before execution.
If a creditor wishes to execute on counter-surety property, the creditor should first attempt to obtain a judgment against the primary obligor. Once a judgment has been obtained, the creditor may then seek to enforce the judgment against the counter-surety property.
The procedure for executing on counter-surety property varies from jurisdiction to jurisdiction. In general, however, the creditor must first obtain a judgment against the primary obligor. Once a judgment has been obtained, the creditor may then file a motion with the court to enforce the judgment against the counter-surety property.
The court will then hold a hearing to determine whether the creditor is entitled to execute on the counter-surety property. At the hearing, the counter-surety may raise any defenses it may have, such as a claim that the primary obligor is not in default or that the creditor has not complied with the terms of the counter-surety agreement.
If the court determines that the creditor is entitled to execute on the counter-surety property, the court will issue an order of execution. The order of execution will authorize the creditor to seize and sell the counter-surety property to satisfy the judgment.
There are a number of defenses that a counter-surety may raise to prevent a creditor from executing on its property. Some of the most common defenses include:
If a counter-surety raises a valid defense, the court may deny the creditor's motion to execute on the counter-surety property.
The question of whether a creditor can execute directly on counter-surety property is a complex one that depends on a number of factors. In general, however, a creditor cannot execute directly on counter-surety property without first obtaining a judgment against the primary obligor.
If a creditor wishes to execute on counter-surety property, the creditor should first attempt to obtain a judgment against the primary obligor. Once a judgment has been obtained, the creditor may then seek to enforce the judgment against the counter-surety property.
If a counter-surety believes that it has a valid defense to execution on its property, it should contact an attorney for advice.
