Banks often require a company’s directors to personally guarantee their company’s borrowings. They sometimes want security for the guarantee over a director’s assets as well.
There is legal protection in place to stop individuals from incurring potentially large liabilities without understanding what they are signing up to. The parties must be particularly careful when security is taken over the family home, as this affects not only the director but others who live there. There is a particular procedure to follow to make sure that everyone involved is fully informed.