Regulatory Alerts2010-06-08
South Dakota Division of Banking Memorandum on Guaranty Agreements
The South Dakota Division of Banking issued this memorandum to correct prior confusion regarding loan guarantees and their impact on bank lending limits by aligning guidance with established South Dakota legal precedent. The document clarifies that guaranties create secondary liability and do not require specific language mandating borrower default before a guarantor is liable, provided the agreement clearly reflects the parties' intent. Consequently, properly drafted guaranteed amounts are excluded from the calculation of lending limits under SDCL 51A-12-2, superseding all previous Division guidance on the topic.
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