Free Consultation
Debt Collection

Is a guarantor in Israel released if the lender changes the loan terms?

Often yes, at least in part. The Guarantee Law 5727-1967 makes the guarantee accessory to the obligation as it stood when the guarantee was signed, so a variation agreed between lender and borrower without the guarantor's consent does not bind the guarantor. Where the change makes the obligation heavier the guarantor remains liable only on the original terms, and a change that alters the bargain fundamentally can discharge the guarantee altogether. Individual guarantors who qualify as a single guarantor or a protected guarantor carry further statutory shields.

A guarantee in Israeli law is accessory, not independent. Section 5 of the Guarantee Law addresses what happens when the guaranteed obligation changes: the guarantor's exposure is measured against the obligation as guaranteed, so an extension of term, an increase in the facility, a new interest formula or a release of security agreed behind the guarantor's back does not automatically travel across. Chapter B of the Law, added by amendment in the 1990s, layers additional protection onto individual guarantors of consumer and housing credit. A single guarantor (arev yachid) must be given notice when the borrower defaults, and a protected guarantor (arev mugan) can require the creditor to exhaust enforcement against the borrower before being pursued. Contracting out of these protections is not permitted.

The scenario recurs constantly in diaspora families. A parent abroad guarantees a child's Israeli mortgage, the loan is later refinanced, extended or topped up, and years afterwards an Execution Office file lands naming the guarantor for a figure that bears no relation to what was signed. Ask the lender in writing for the original guarantee, the loan schedule as it stood on the signing date, and every subsequent amendment. Raise the variation point at the objection stage rather than after the file has been processed, since the window is short and the burden is easier to discharge before enforcement steps are taken. Read the guide on personal guarantor obligations in Israel before signing anything further.

⚖ In Practice
  • Governing law: Section 5, Guarantee Law 5727-1967; the single guarantor (arev yachid) and protected guarantor (arev mugan) protections in Chapter B
  • Competent authority: Execution Office (Hotza'a LaPoal) for enforcement; the Magistrates' Court or District Court for a declaratory claim, depending on the amount in dispute
  • Notice duty: the lender must notify a single guarantor of the borrower's default, and failure to do so reduces the guarantor's liability by the damage the omission caused
  • Exhaustion rule: a creditor pursuing a protected guarantor must first enforce against the borrower's assets
  • Deadline: file the objection within 30 days of service of the Execution Office warning (azharah)
  • Evidence to gather: the signed guarantee, the loan schedule as at the signing date, and every later amendment the guarantor did not sign

From the full guide: Personal Guarantor in Israel: Obligations, Rights & Risks

Related Questions

Related Guides

Need legal help with this topic?
Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

← Browse all Q&A