When enforcing loans, it is common to hear arguments made byguarantors’ counsel that their clients did not understand that theywould be liable to pay up to the entire amount of the borrower’sdebt, even if the lender took back the real property collateral forthe loan through a nonjudicial trustee’s sale.

While some of this argumentation may be intentionally misleadingor, more charitably, an advocate’s attempt to put the best spin onthe circumstances facing his or her client, most guaranties ofCalifornia real property loans are complicated and hard to read.However, they generally are enforceable (subject to certainlimitations): California law allows a third party guarantor toguarantee a loan made to a borrower and secured by the borrower’sreal property. Such a guaranty gives the lender theright to collect the debt from the guarantor pursuant to itsguaranty, as well as to collect the debt from the property pursuantto its rights under the deed of trust, and to collect from theborrower on the note (through a judicialforeclosure).

Why are such guaranties hard to understand?