I’m a guarantor for the mortgage loan of my friend. Recently I received a decision from the court stating that the sum of the loan and interest was recovered from me. I didn’t know anything about any court hearing and never received any requests for summons. Are the actions of the bank and court lawful?

Most likely, there was used a so-called procedure of undisputed compulsory execution of obligations against you. According to Section 400, Paragraph 1, Clause 1 of the Civil Procedure Law, undisputed compulsory execution of obligations is permitted pursuant to agreements regarding obligations which are secured with a public mortgage or a commercial pledge.

The main point of this procedure is that a mortgage creditor submits an application to the court with request to perform the undisputed compulsory execution of obligations regarding the loan, but the judge, without informing the debtor and creditor, examines the application within 7 days and takes the adjudication. At this stage the court is not adjudicating the matter on the merits (whether the loan was paid off or not, in what amount was the loan paid off, were the payments delayed or not, etc.), but only considers the procedural issues and the correctness of the documents. After considering that the submitted application is well-founded and recognizing that it shall be satisfied, the judge takes an adjudication which specifies what obligation and in what amount it shall be executed in the undisputed compulsory way.

The bank is entitled to submit application for undisputable compulsory execution of obligations against principal debtor, as well as against the guarantor in case if he has undertaken obligations as a principal debtor (Section 402 of the Civil Procedure Law).

Therefore, if in the contract of guarantee you have taken the obligation to be liable for the loan as principal debtor, then the court has the right to use the procedure of undisputed compulsory execution of obligations against you. The adjudication for allowing the executing of the procedure may not be appealed and comes into force immediately. However, according to Section 1704 of the Civil Law the guarantor has the right to bring a subrogation action against the principal debtor.