Guaranteed debt obligation. A guar- anteed debt obligation is a legal duty of one person as a guarantor, endorser or indemnitor of a second person to pay a third person. It does not include du- ties based solely on moral or good pub- lic relations considerations that are not legally binding. A guaranteed debt obligation typically arises where a sell- er receives in payment for property or services the debt obligation of a pur- chaser and sells that obligation to a third party with recourse. However, a guaranteed debt obligation also may arise out of a sale in respect of which there is no direct debtor-creditor rela- tionship between the debtor purchaser and the seller. For example, it arises where a purchaser borrows money from a third party to make payment to the seller and the seller guarantees the payment of the purchaser’s debt. Gen- erally, debt obligations which are sold without recourse do not result in any obligation of the seller as a guarantor, endorser, or indemnitor. However, there are certain without-recourse transactions which may give rise to a seller’s liability as a guarantor or indemnitor. For example, such a liabil- ity may arise where a holder of a debt obligation holds money or other prop- erty of a seller which the holder may apply, without seeking permission of the seller, against any uncollectible debt obligations transferred to the holder by the seller without recourse, or where the seller is under a legal ob- ligation to reacquire the real or tan- gible personal property from the holder of the debt obligation who repossessed property in satisfaction of the debt ob- ligations.
