Tex. Civ. Prac. & Rem. Code §§ 16.004(a)(3), 38.001(b)(8), 38.002; Tex. Bus. & Com. Code § 26.01(b)(2)
Breach of guaranty in Texas — suing the person who promised to pay someone else's debt
A claim in Texas district and county courts · Last verified August 26, 2026
A guaranty is a promise to pay another person's debt if that person does not. When the borrower defaults, the lender sues the guarantor, and the guarantor discovers two things at once: the promise was broader than remembered, and the lender does not have to chase the borrower first.
A guaranty of payment can be enforced against the guarantor immediately on default. Only a guaranty of collection requires the lender to exhaust the borrower first, and Texas will not read a guaranty as one of collection unless the document says so.
What the claim is
Someone signed a written promise to answer for a debt. The borrower defaulted. The guarantor was asked to pay and refused.
Where the right comes from
The guaranty contract itself, read against the common law of suretyship. There is no guaranty statute; the terms of the document control, and the surrounding law fills the gaps.
What a plaintiff has to prove
- The existence and ownership of the guaranty agreement.
- The terms of the underlying obligation the guaranty covers.
- The occurrence of the conditions on which liability depends — usually default, sometimes demand or notice as well.
- The guarantor's failure or refusal to perform.
The third element carries the litigation. A guaranty that conditions liability on written demand, on notice of default, or on prior suit against the borrower means what it says, and a lender who skipped the condition has not proved its case.
The guaranty must be in writing
Under Tex. Bus. & Com. Code § 26.01(b)(2), a promise to answer for the debt of another is unenforceable unless it is in writing and signed by the person to be charged. An oral guaranty is worth nothing, and this is one of the few places where the statute of frauds does regular work.
The exception is the main-purpose rule: where the promisor's own leading object was to serve their own interest rather than to back someone else's debt, the promise is treated as original and the writing requirement drops away. That argument is available, and it is difficult.
Payment or collection — the distinction that decides the case
A guaranty of payment is an independent promise. On default, the lender may sue the guarantor without suing the borrower, without foreclosing on collateral, and without giving notice. Texas treats a guaranty as one of payment by default.
A guaranty of collection is conditional. The lender must first pursue the borrower to judgment and show the judgment cannot be collected. To get this treatment the document has to say something like "guaranty of collection," or otherwise condition liability on the exhaustion of remedies against the principal.
Guarantors routinely assume they occupy the second position and find they signed the first.
How long you have to file
Four years. A suit on a guaranty is a suit for debt under CPRC § 16.004(a)(3), and the residual period in CPRC § 16.051 reaches anything the debt provision does not.
The period runs from the guarantor's failure to pay, not from the borrower's first missed instalment — and where the guaranty conditions liability on demand, from the refusal after demand.
What has to happen before you file
Nothing, to sue. To recover attorney's fees under CPRC § 38.001, the claimant must present the claim and wait: under CPRC § 38.002, the claimant must be represented by an attorney, the claim must be presented to the opposing party, and payment must not have been tendered within 30 days of presentment.
What the claim pays
The guaranteed obligation — principal, accrued interest, and whatever else the guaranty covers, up to any cap the document sets.
Contract interest, at the rate the underlying note provides.
Attorney's fees under CPRC § 38.001(b)(8), which allows fees on an oral or written contract. The award runs one way, to the prevailing claimant, unless the guaranty itself contains a two-way provision. Since the 2021 amendment, § 38.001(b) does not reach a quasi-governmental entity authorised to perform a function by state law, a religious organisation, a charitable organisation, or a charitable trust.
Who can be sued
Each guarantor. Where several people signed, a guaranty that makes liability joint and several lets the lender collect the whole debt from any one of them, leaving that guarantor to seek contribution from the others.
Not the guarantor's spouse, absent a signature. A guaranty binds the person who signed and the community property that answers for their obligations; it does not convert a spouse into a party.
After a foreclosure — the deficiency offset
Most guaranty suits follow a foreclosure, and a guarantor sued for the deficiency has a statutory answer. Under Property Code § 51.003, a deficiency action after a non-judicial foreclosure of real property must be brought within two years of the sale, and any party against whom recovery is sought may ask the court to determine the property's fair market value at the time of sale. If that value exceeds the bid, the deficiency is reduced accordingly.
The result is that a lender who bought the property at auction for a fraction of its worth cannot hold the guarantor for the gap, and the two-year deadline is shorter than the four-year period on the guaranty itself.
Common defenses
- No writing, or a writing that does not identify the obligation guaranteed.
- Material alteration of the underlying deal without the guarantor's consent — an increased principal, an extended maturity, a changed rate. This discharges a guarantor who did not agree to it, and a guaranty that consents in advance to modifications forecloses the argument.
- Impairment or release of collateral by the lender.
- Revocation of a continuing guaranty, which ends the guarantor's exposure for future advances but not for what has already been extended.
- The conditions to liability were not met — no demand, no notice, no prior suit where the document required one.
- Fair market value offset under Property Code § 51.003.
- Limitations.
What people get wrong
A personal guaranty does not die with the company. That is the point of it. Dissolution, bankruptcy of the business, or a discharge of the corporate debt leaves the guarantor exposed.
The lender does not have to sue the borrower first. Unless the document is a guaranty of collection, the lender may go straight at the guarantor, and often does because the guarantor has assets the business does not.
Signing "as president" may not help. A signature block that identifies an office does not convert a personal guaranty into a corporate one where the body of the document names the individual as guarantor. Courts read the whole instrument.
Fees run one way. The lender recovers fees under § 38.001 on a winning claim; a guarantor who defeats the suit recovers nothing unless the guaranty says otherwise.
Where it came from
Guaranty law came into Texas from the English law of suretyship, which treated the surety as a favoured debtor entitled to strict construction of the promise and discharge on any change to the underlying bargain. Commercial lending eroded that protection, and modern Texas guaranties are drafted to waive nearly all of it — notice, presentment, marshalling of assets, the effect of modifications, and the defences of the principal.
What survives is the writing requirement and the deficiency offset. The first comes from the statute of frauds and cannot be waived away by silence; the second comes from Property Code § 51.003 and reflects a legislative judgment that foreclosure bids run low. Everything else in a modern guaranty case turns on what the document says.
Common questions
How long does a lender have to sue on a guaranty in Texas?
Four years from the guarantor's failure to pay. A deficiency claim after a non-judicial foreclosure must be brought within two years of the sale.
Does the bank have to sue the borrower first?
No, unless the guaranty is a guaranty of collection. Texas treats most guaranties as guaranties of payment, which allow suit against the guarantor immediately on default.
Can an oral guaranty be enforced?
No. A promise to answer for another's debt must be in writing and signed.
Can the lender recover attorney's fees?
Yes, on a written or oral contract under § 38.001(b)(8), after presenting the claim and waiting 30 days. The award runs one way unless the guaranty provides otherwise.
Does bankruptcy of the business wipe out the guaranty?
No. The company's discharge does not discharge the guarantor.
What if the loan terms changed after I signed?
A material alteration made without your consent can discharge you — but most guaranties consent in advance to modifications, renewals and extensions.