Coverage; Limited Guaranty Clause Samples
The "Coverage; Limited Guaranty" clause defines the extent and boundaries of a guarantor's responsibility for fulfilling certain obligations if the primary party defaults. Typically, this clause specifies which obligations are covered by the guaranty, such as payment of a loan or performance of a contract, and sets explicit limits on the guarantor's liability, such as a maximum dollar amount or specific conditions under which the guaranty applies. Its core practical function is to provide assurance to the beneficiary that some level of backup protection exists, while also protecting the guarantor from unlimited or unforeseen liability.
Coverage; Limited Guaranty. Subject to subsection (c) below, prior to the later of the third Business Day prior to each Distribution Date or the related Determination Date, the Master Servicer shall determine whether it or any Sub-Servicer will be entitled to any reimbursement pursuant to Section 4.02(a) on such Distribution Date for Advances or Sub-Servicer Advances previously made, (which will not be Advances or Sub-Servicer Advances that were made with respect to delinquencies which were subsequently determined to be Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses) and, if so, the Master Servicer shall demand payment from Residential Funding of an amount equal to the amount of any Advances or Sub-Servicer Advances reimbursed pursuant to Section 4.02(a), to the extent such Advances or Sub-Servicer Advances have not been included in the amount of the Realized Loss in the related Mortgage Loan, and shall distribute the same to the Class B Certificateholders in the same manner as if such amount were to be distributed pursuant to Section 4.02(a).