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What extra protection does Israeli law give a protected guarantor (arev mugan)?

The Guarantee Law 5727-1967 creates two special categories for private individuals who guarantee someone else's loan: the single guarantor (arev yachid) and the protected guarantor (arev mugan), which is a single guarantor whose guaranteed loan falls below a ceiling set in the Law's Addendum. A protected guarantor is liable only for the principal amount stated in the guarantee document. The lender must first exhaust enforcement against the borrower, including realising any security, and must send written notice of default before turning to the guarantor.

These protections were added to the Guarantee Law in the 1990s after Israeli courts saw large numbers of family members ruined by guarantees they had not understood. A single guarantor is a private individual, not a company and not a co-borrower. A protected guarantor is a single guarantor whose guaranteed loan does not exceed the figure fixed in the Addendum to the Law, which is index linked and is set materially higher for housing loans than for ordinary consumer credit. For that person the lender must disclose the loan terms in writing before signature, cannot enlarge the exposure afterwards, and cannot collect interest, costs and charges that were never spelled out.

The sequencing rule matters most in practice. A lender facing a defaulting borrower must open enforcement against the borrower and realise any pledged security first, and only if that fails may it move against a protected guarantor. Guaranteeing a relative's Israeli mortgage is therefore not the same as guaranteeing a consumer overdraft, because the housing ceiling is much higher and the exposure can be substantial. Guarantors living abroad should insist that default notices are sent to a foreign address on record, since the protection depends on notice actually being given. Our guide to acting as a personal guarantor in Israel sets out the full sequence.

⚖ In Practice
  • Governing law: Chapter B, Guarantee Law 5727-1967, covering the arev yachid and arev mugan categories introduced by the 1992 amendment
  • Competent authority: Execution Office (Hotza’a LaPoal) for enforcement; Magistrates’ Court for disputes about the guarantee itself
  • Ceiling: the Addendum sets separate index-linked limits, materially higher for housing loans than for other credit; confirm the current figure with the lender in writing before signing
  • Sequencing: the lender must obtain judgment and exhaust enforcement against the borrower, including realising security, before pursuing a protected guarantor
  • Notice: written notice of the borrower’s default is a precondition of collection; keep proof of the address the lender holds for you

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

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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