SENATE BILL 197

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

Mary Kay Papen

AN ACT

RELATING TO BUSINESS; ENACTING THE GUARANTOR RIGHTS ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. SHORT TITLE.--This act may be cited as the "Guarantor Rights Act".

     Section 2. DEFINITIONS.--As used in the Guarantor Rights Act:

          A. "creditor" means a person that is entitled to receive payment from a principal pursuant to a contract between the creditor and the principal;

          B. "guarantor" means a person that is or may become obligated to a creditor on behalf of a principal under the terms of a guaranty;

          C. "guaranty" means a promise to answer for the debt, default or miscarriage of another person; and

          D. "principal" means a person that is obligated to make payment to a creditor pursuant to a contract between the principal and the creditor.

     Section 3. NOTICE OF DEFAULT.--

          A. A creditor shall, within thirty days of obtaining knowledge of the default of a principal, give a guarantor notice of the default of a principal unless the guarantor has actual notice of the default of the principal.

          B. A guarantor shall be exonerated from all obligations to a creditor under a guaranty if the creditor fails to give the guarantor notice as required pursuant to Subsection A of this section.

     Section 4. GUARANTOR'S RIGHT TO INFORMATION--PRINCIPAL'S WAIVER OF RIGHT TO PRIVACY.--

          A. A guarantor shall be entitled to obtain from a creditor information regarding the status of the obligation of the principal to the creditor, which obligation is the subject of a guaranty with that guarantor.

          B. Where a principal enters into, knows of or consents to a guaranty, the principal shall be deemed to have consented to the release of information by a creditor, to a guarantor, regarding the status of the obligation that is the subject of a guaranty agreement with that guarantor.

     Section 5. SEVERABILITY.--If any part or application of the Guarantor Rights Act is held invalid, the remainder or its application to other situations or persons shall not be affected.

     Section 6. APPLICABILITY.--

          A. Nothing in the Guarantor Rights Act shall affect other rights or obligations of guarantors conferred or imposed by law.

          B. The Guarantor Rights Act shall not apply to rights of guarantors pursuant to guaranties entered into prior to July 1, 2006.

     Section 7. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2006.

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