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The text explains why a well-drafted agreement reduces uncertainty and litigation, highlights state-by-state variability, and notes federal income tax considerations when allocating losses.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/template/","Template",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/template/forms/","Forms",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/template/contribution-agreements-among-guarantors-with-form-who-pays-when-and-how-much/282451/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/contribution-agreements-among-guarantors-with-form-who-pays-when-and-how-much/282451.png","ImageObject",442,249,{"name":42,"@type":43},"Elsa","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-11-05","2026-09-16",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",10,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"Why should guarantors enter into a contribution agreement?","Question",{"text":63,"@type":64},"Because common-law contribution principles can lead to unclear or state-varying answers about how much each guarantor must pay if the guaranty is called and one party pays the lender.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"Under general common-law rules, how are contribution obligations typically apportioned among guarantors?",{"text":68,"@type":64},"Co-obligors on a common obligation are generally required to contribute equally to the debt when the borrower does not pay, so each guarantor would pay one-third in the example with three guarantors.",{"name":70,"@type":61,"acceptedAnswer":71},"Do guarantors with unequal ownership interests always pay in proportion to their ownership?",{"text":72,"@type":64},"No. Some courts allocate based on relative interests or benefits, but most cases hold guarantors must pay equally despite differing ownership interests unless an express or implied agreement supports deviation.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},282451,1790673657,{"code":4,"msg":82,"data":83},"success",[84,89,94,99,104,109,113,118,123],{"id":85,"doc_module":22,"doc_module_name":25,"category_name":86,"show_sort_weight":87,"slug":88},11,"Presentations",90,"presentations",{"id":90,"doc_module":22,"doc_module_name":25,"category_name":91,"show_sort_weight":92,"slug":93},12,"Resumes",80,"resumes",{"id":95,"doc_module":22,"doc_module_name":25,"category_name":96,"show_sort_weight":97,"slug":98},14,"Invoices",70,"invoices",{"id":100,"doc_module":22,"doc_module_name":25,"category_name":101,"show_sort_weight":102,"slug":103},15,"Posters",60,"posters",{"id":105,"doc_module":22,"doc_module_name":25,"category_name":106,"show_sort_weight":107,"slug":108},16,"Social Media",50,"social-media",{"id":110,"doc_module":22,"doc_module_name":25,"category_name":29,"show_sort_weight":111,"slug":112},17,40,"forms",{"id":114,"doc_module":22,"doc_module_name":25,"category_name":115,"show_sort_weight":116,"slug":117},18,"Letters",30,"letters",{"id":119,"doc_module":22,"doc_module_name":25,"category_name":120,"show_sort_weight":121,"slug":122},21,"Paper Templates",5,"papers-templates",{"id":124,"doc_module":22,"doc_module_name":25,"category_name":125,"show_sort_weight":4,"slug":126},158,"General","general-158",{"code":4,"msg":82,"data":128},{"doc_id":79,"user_id":129,"nickname":42,"user_avatar":130,"doc_module":22,"category_id":110,"category_name":29,"doc_title":10,"doc_description":12,"doc_content":131,"file_id":132,"file_url":133,"file_type":134,"file_size":135,"view_count":55,"is_deleted":4,"is_public":22,"is_downloadable":22,"audit_status":22,"page_count":55,"language":136,"language_code":8,"site_id":7,"html_lang":8,"table_of_contents":137,"faqs":138,"seo_title":139,"seo_description":12,"update_tm":140,"read_time":33,"preview_page_count":4},137455077381,"https://ap-avatar.wpscdn.com/davatar_994ba38a5ba835b3df7d355c54d3ed8d","Contribution Agreements Among Guarantors (With Form)  \nBrian Hulse, a partner with the Seattle office of Davis Wright Tremaine LLP, focuses his practice on real estate finance, commercial lending and transactions, loan workouts, and bankruptcy. He chairs the State Law Survey Task Force of the ABA’s Commercial Financial Services Committee and is a member of the ABA’s Business Bankruptcy Committee and Secured Creditors’ Subcommittee. He is also a member of the American College of Mortgage Attorneys and the Washington State Bar Association. He is author of Washington Lending Law, A Guide for Commercial Lenders (ABA, 2000-2008) and Protection for the Prepaying Purchaser: What if the Seller Goes Broke? Business Law Today, January/February 2005. He has been named one of the “Best Lawyers in America” by Woodward/White, and has been selected to “Washington Super Lawyers” by Washington Law & Politics The author gratefully acknowledges the assistance of Pamela M. Charles of Davis Wright Tremaine LLP with the portions of this article dealing with federal income tax matters.  \nBrian D. Hulse  \nWho pays when? And how much?  \nWhen a closely held limited liability company or corporation borrows money, the lender often requires the members or shareholders to guarantee the loan. If oneof the guarantors pays on the guaranty, that guarantor is entitled to contribution payments from the other guarantors. However, the law about the relative proportion of the loan that each guarantor is obligated to pay is often different from what the guarantors would have agreed upon if they had considered the issue in an informed way at the time they gave the guaranties. To avoid uncertainty and litigation, guarantors should always enter into a contribution agreement setting out their relative contribution obligations in the event the guaranties are called upon.  \nConsider the simple example of three members of a limited liability company (the “borrower”), which borrows $3 million from a bank (the “lender”) to finance the purchase of a commercial property. The loan is secured by a mortgage on the property and the three members of the borrower (the “guarantors”) jointly and severally guarantee the entire loan. One guarantor owns a 60 percent interest in the borrower, one owns 30 percent and one owns 10 percent. The loan goes into default and the lender demands payment from the guarantors. The guarantor owning a 10 percent interest in the borrower pays the entire loan balance and then asks the other guarantors to pay their fair shares of the amount the paying guarantor paid to the lender.  \nThe Practical Real Estate Lawyer | 55  \n56 | The Practical Real Estate Lawyer January 2009  \nEven in the absence of a contribution agreement, the paying guarantor is entitled under common law contribution principles to repayment of apart of the amount paid to the lender. However, the amount the paying guarantor is entitled to recover from the other guarantors depends on the answers to a number of questions that should be addressed in a well-drafted contribution agreement. In the absence of such an agreement, the answers can be unclear and can vary from state to state. The guarantors should also be mindful of the federal income tax implications of their contribution obligations, especially for the ability to allocate losses of a borrower that is a partnership or a limited liability company taxed as a partnership.  \nGeneRaL RULeS aBOUT ReLaTIVe LIaBILITY • Generally, co-obligors with respect to a common obligation are obligated to contribute equally to payment of the debt if the borrower does not pay it. Restatement of Suretyship and Guaranty (“Restatement”), section 57(1) . Under this general rule, each of the three guarantors in the example above would be required to pay one-third of the total debt.  \nIn the example above, the paying guarantor might well believe that, because he or she owned only 10 percent of the borrower, he or she should not have to pay more than 10 percent ","cbCaie13H59mCExz","https://ap.wps.com/l/cbCaie13H59mCExz","pdf",272609,"English","# Who pays when? And how much?\n## Equal contribution principles and per capita liability\n## Unequal ownership interests and benefit-based allocation\n## Issues for married individual guarantors","[{\"question\":\"Why should guarantors enter into a contribution agreement?\",\"answer\":\"Because common-law contribution principles can lead to unclear or state-varying answers about how much each guarantor must pay if the guaranty is called and one party pays the lender.\"},{\"question\":\"Under general common-law rules, how are contribution obligations typically apportioned among guarantors?\",\"answer\":\"Co-obligors on a common obligation are generally required to contribute equally to the debt when the borrower does not pay, so each guarantor would pay one-third in the example with three guarantors.\"},{\"question\":\"Do guarantors with unequal ownership interests always pay in proportion to their ownership?\",\"answer\":\"No. Some courts allocate based on relative interests or benefits, but most cases hold guarantors must pay equally despite differing ownership interests unless an express or implied agreement supports deviation.\"}]","Contribution Agreements Among Guarantors - With Form - Who pays when and how much | PDF",1789574966]