The bank never gave a wife who guaranteed her husband’s loan the letter the guarantors law requires. The Supreme Court held on 21 October 2026 that she still had to pay.
Klitos Platis, advocate
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A guarantor who never received the letter the guarantors law requires is not released for that reason alone. On 21 October 2026 the Supreme Court dismissed the appeal of a wife who had guaranteed her husband’s bank loan and mortgaged her share of a house to secure it, and left in place a judgment for €196,649.66 and an order to sell the property.
The case matters to anyone who has signed a personal guarantee for someone else’s borrowing, and to every family where one spouse borrows and the other signs. The protections in Law 197(I)/2003 are real, but this judgment shows how narrowly they operate once the case reaches court.
What happened
Bank of Cyprus lent the husband CYP 105,000 (€179,403.15). His wife guaranteed his obligations up to CYP 126,000, and the two of them registered a mortgage over their property in Paralimni as further security. The loan was later transferred to Themis Portfolio Management Holdings Ltd, which took the bank’s place in the proceedings under Law 169(I)/2015.
When the loan went unpaid, the bank sued both spouses in the Famagusta District Court. On 10 May 2017 that court gave judgment against them jointly and severally for €196,649.66 plus interest and costs, and ordered the sale of the mortgaged property. The wife appealed.
What the guarantor argued
She said the bank had never delivered the letter that section 5 of the Law requires before a guarantor signs. That letter must set out the amount of the loan, the interest rates, the instalments, the default interest and any co-guarantors, together with a statement of the borrower’s assets. She also said the bank had not kept her informed of her husband’s defaults, that it had agreed to cancel the guarantee, and that she had signed without independent legal advice.
Why the appeal failed
The missing letter did not release her, because she did not prove that it harmed her. The District Court had accepted that the section 5 letter was never delivered. The Supreme Court held that failures under sections 5 and 12 of the Law discharge a guarantor only where they are shown to have harmed the guarantor’s ability to recover in the end from the borrower, as section 12(3)(a) provides. No such harm was proved.
She signed freely and understood what she was signing. The guarantee document itself said that she gave it without pressure and fully understood its consequences. A lawyer had also signed a statement on 16 December 2005 that he had explained the risks to her and that she had signed freely in his presence. The trial court found her evidence full of contradictions, and the Supreme Court saw no reason to interfere.
There is no general rule that a wife’s guarantee needs independent advice. Relying on Barclays Bank v O’Brien as applied in Siati v National Bank of Greece (2000), the Court repeated that the bank’s extra duty arises where the husband has used undue influence or fraud. Nothing of that kind was shown. The couple had bought two homes, in Ayia Napa and Paralimni, at the time, and the borrowing served them both.
The mortgage stood on its own. She never disputed the mortgage, which contained her own acknowledgment that she owed the secured sum. The Court held that a valid and unchallenged mortgage justified the order to sell, whatever was said about the guarantee.
A missing statutory letter is a point worth taking, but it releases a guarantor only if the omission is shown to have caused real harm.
The appeal was dismissed with €2,500 plus VAT in costs against the guarantor.
What this means in practice
For anyone asked to sign a guarantee: read what the bank gives you, and keep it. If you have not received a letter with the loan amount, the instalments and the default rate, ask for it before you sign. Know that a signed statement that you understood the risks, and a lawyer’s certificate that he explained them, will be used against you later, as they were here.
For company directors: Section 3(1) excludes from this Law guarantees given for a company’s loan by someone who was a director of that company when signing. Many business owners who guarantee their own company’s facilities assume otherwise, so the time to protect yourself is before you sign: negotiate a cap on the amount, a time limit, and written notice of every default, and keep the documents.
For a guarantor who is already being sued: do not rest the defence on the missing letter alone. The question the court asks is what the bank’s failure cost you, for example whether a timely warning of the borrower’s defaults would have let you recover from him before his assets went. Gather that evidence early. And if you also signed a mortgage, look at the mortgage on its own terms, because a defence that touches only the guarantee may leave the property exposed.
The trap is to treat a procedural lapse by the bank as a release. Here the bank’s lapse was accepted, and the guarantor still lost the appeal because the harm was never proved. Build the defence on what the lapse cost you, and it has a real chance to count.
Our litigation team defends guarantors and borrowers in bank recovery actions, and our property lawyers advise on mortgages and on the sale of mortgaged property. On a related point, see how a director-guarantor lost by failing to identify a single wrong entry in the bank’s statements.
Questions we are asked
The bank never gave me the letter the guarantors law requires. Am I released?
Not automatically. In this case the Supreme Court accepted that the letter under section 5 of Law 197(I)/2003 had not been given, and still held the guarantee valid, because the guarantor did not prove that the omission harmed her ability to recover from the borrower.
I guaranteed my own company’s loan. Does the guarantors law protect me?
Usually not. Section 3(1) of Law 197(I)/2003 excludes a guarantee given for a company’s loan by a person who was a director of that company when the guarantee was signed.
I also signed a mortgage on my home. Does a defence to the guarantee help with the mortgage?
Only if the mortgage itself is challenged. Here the guarantor never disputed the mortgage, which contained her own acknowledgment of the debt, and the Court held that the mortgage on its own justified the order to sell the property.
What should my first message say?
The lender and the date of the loan, the date and amount of each guarantee and mortgage you signed, any letters the bank sent you before and after you signed, whether you were a director of the borrower at the time, and any court papers you have received.
Sources
- Eleni Konstantinou v. Themis Portfolio Management Holdings Ltd, Civil Appeal 223/2017, Supreme Court of Cyprus, 21 October 2026
- The Protection of Certain Categories of Guarantors Law of 2003, Law 197(I)/2003, consolidated text, sections 3, 5 and 12, CyLaw
Need advice on your own matter?
Your first message costs nothing: within one working day we tell you whether we can help and what it would cost.
klitos@kleanthousplatis.com
Kleanthous & Platis LLC Registered law company Cyprus Bar Association HE 441973
Further reading
This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com.
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