If you guaranteed a loan up to a set amount, you are bound only up to that amount. A bank cannot later lend the borrower much more and then expect you to cover the extra. Also, before a bank sells property that was charged as security, it must be able to prove it sent the required notices to the correct address.
What a guarantee covers
A guarantor is someone who promises to answer for another person’s debt if that person does not pay. Courts read a guarantee strictly, according to what is written in it. They do not stretch it to cover more than the guarantor agreed to.
So if your guarantee says it is limited to a stated amount, that figure is your ceiling. This holds even if the bank later gives the borrower larger loans without your consent. Your promise does not grow just because the borrower’s debt did.
In everyday terms: if you signed to stand behind a loan of a modest sum, and the borrower later takes a much bigger facility, you are not automatically answerable for the bigger one. What counts is the cap you put your name to.
Notices before a bank sells charged land
When a bank wants to sell land that was charged as security for a loan, the Land Act requires it to serve certain statutory notices. These include a notice of default and a notice of sale. They must go to the borrower and to others with an interest in the matter, such as a guarantor.
The bank cannot simply say it sent the notices. It must be able to prove it sent them to the correct address. If it cannot, the sale can be challenged and stopped.
Practical steps
- Keep a copy of every guarantee you sign, and read the amount written in it before signing.
- Check the limit against any new loan the borrower takes. If you are unsure whether it falls within your guarantee, ask the bank to explain in writing.
- Give the bank your correct address and tell it in writing if the address changes, and keep proof that you did so.
- Keep any letters or notices you receive, with the dates they arrived.
- Speak to an advocate early if a bank demands more than your guarantee states or you hear that your property may be sold.
Whether a particular guarantee covers a particular loan, or whether notices were properly served, is decided by a court on the evidence. It is not settled on the spot at a bank counter. A decision at the High Court level can also be appealed, so the details of each situation matter.
📚 Masakha v Family Bank Ltd & 2 others [2026] KEHC 15897 (KLR)
Entertainment and general information, not legal advice. For advice on your own situation, speak to an advocate.