J and his wife provided K with a guarantee with supporting legal charge over their home for the debts of J’s company. The company entered administration and demand under the Guarantee was made in 2010 by the lender. The lender then wrote to J and his wife during the latter part of 2017 claiming £400,000 plus interest and costs pursuant to the Guarantee and looking to enforce its charge over J’s home.
The Guarantee relied upon by the lender was clearly drawn as a simple contract and not as a Deed. As such it was subject to a 6 year limitation period from the date of demand, being the date upon which the cause of action arose. Demand was made 2010 and therefore K was statute barred from pursuing J under the Guarantee. As a result, the charge over J’s property secured nothing as J and his wife had no liability under the Guarantee. The lender had no other choice but to release the legal charge over J’s property intended to support the Guarantee and provide written confirmation to J of his release from the Guarantee, returning the original to him.