When the same person acts as personal guarantor for a debtor's obligations to a credit institution and also assigns one or more assets as mortgage security for those same obligations, that credit institution owes him the annual information required by Article L. 313-22 of the Monetary and Financial Code .
It is relatively common for a person to assign one of their assets as security for the debt of another; in this case, it is a pure real security for another and not a guarantee ( CCass Mixte. 2 Dec. 2005 n°03-18.210, Com. 25 Nov. 2020, n° 19-11.525 ) .
On the other hand, it is less common for the parties to clearly agree to conclude a guarantee in addition to a real security, although this situation presents a significant advantage for the creditor who can always rely on the principle of real security in the event that the guarantee proves ineffective for a specific reason.
In a ruling issued on June 2, 2021, the commercial chamber of the Court of Cassation clarified the application procedures for the suretyship regime.
In this case, a bank had granted two companies loans as well as various overdraft facilities and discount lines. The manager of these companies, along with another person, acted as joint and several guarantors for said companies and mortgaged a property belonging to them as security.
With the debtor companies having been placed in judicial liquidation, the bank served the guarantors with a writ of execution against their real estate, then summoned them to a preliminary hearing before the enforcement judge. The guarantors then raised several objections, notably alleging the bank's failure to fulfill its obligation to provide the guarantors with annual information regarding the amount of the debt, as stipulated by Article L. 313-22 of the French Monetary and Financial Code, and consequently requesting that payments made by the debtor company be allocated primarily to the principal of the debt, without taking interest into account.
Indeed, according to article L.313-22 of the Monetary and Financial Code , the credit institution which has granted financial assistance to a company on the condition of a guarantee by a natural person is required to inform the guarantor of the status of the guaranteed debt, failing which the credit institution forfeits the interest.
In a judgment delivered on March 28, 2019, the Court of Appeal of Versailles ruled in favour of the credit institution on the grounds that Article L.313-22 of the Monetary and Financial Code is not intended to apply in the context of a real security.
This position was overturned by the Court of Cassation, which held that " in so ruling, after noting that, in addition to the mortgage on the property, Mr. [W] and Mrs. [H] had personally guaranteed the loans granted to the debtor companies, such that the bank was bound by the annual reporting obligation stipulated in Article L. 313-22 of the Monetary and Financial Code, the Court of Appeal violated the aforementioned provisions."
Thus, although the real security is not subject to the surety regime and, a fortiori to the application of article L.313-22 of the Monetary and Financial Code, the application of this regime cannot be excluded when a personal guarantee has also been given.
