Surety's Rights Against the Principal

Question 1

What is a surety’s right to indemnity or reimbursement?

Answer 1

After full or partial payment by a surety, the surety has an ABSOLUTE right to be reimbursed by the principal.

Question 2

Is the giving of another non-negotiable note considered reimbursement?

Answer 2

No.

Question 3

When does the statute of limitations on the surety’s right to reimbursement begin running?

Answer 3

Upon payment

Question 4

What is the right to exoneration?

May the surety require that a creditor sue the principal first on an obligation?

Answer 4

When an obligation falls due, the surety may bring a suit in equity to compel the principal to perform the obligation.

Yes, by written notice, the surety may require the creditor to sue the principal first; if the creditor refuses or fails to act within 30 days of notice, the surety is discharged.

Question 5

What is the surety’s right to subrogation?

Answer 5

Once the surety has fully paid the credit, the surety may enforce any rights the creditor had against the principal.