What Is A Fiador?
In Portugal, in the majority of cases, when you rent an apartment, you will be asked to have a fiador. What is a fiador? In plain words, a fiador is someone who acts as a guarantee that someone will pay a debt (in this case, rent). When someone agrees to be a fiador, he or she becomes responsible for the full satisfaction of the debt, if the primary does not pay. So, if you become a fiador to a friend who is renting an apartment, and they are not able to pay the rent; the landlord can demand payment both from you and your friend. Obviously, there are risks and responsibilities in being a fiador.
What Are The Risks And Responsibilities Of A Fiador?
Your Assets Are Collateral
When you agree to become a fiador for a family member or friend, you place your assets as collateral for third party debt, since you are on the hook to the creditor for debts in case your friend/family defaults.
What Are The Protections Of A Fiador?
Landlord Notification
If the tenant is late in paying, the landlord MUST inform you as a fiador and include both how late the tenant is and what the euro amount they own is. If they do not, the landlord cannot demand any payment from you (the fiador).
Prior Exclusion Clause
There is a clause called benefício da excussão prévia. Make absolutely sure that the fiador agreement you sign “does not waive this. This clause makes it so that the landlord must go after the primary debtor’s assets before they can touch yours.
You Become The Creditor
If you end up having to pay the debt, you become the creditor and you can demand payment. Does this mean you’re actually getting paid? Not necessarily. But that is what the laws state.
Should I Become A Fiador For Someone?
I wouldn’t. But the final choice is up to you. If you do decide to become a fiador, I would recommend that you schedule a consultation with a Portuguese lawyer so they can explain the details of this task, as I only touched on very broad points.
Can I Quit Being a Fiador
Sorry, but the answer is no. There are only two ways in which you can get rid of your fiador title:
- The debt is paid.
- The creditor agrees to it.
The second scenario is rare. Why would a creditor want to lose security that the dollars owed will be paid? If you want to try it, get a good lawyer, contact the creditor, and let him/her know that you want to be rid of this responsibility. They usually only release you when there is someone else who is willing to take over the role.
If you have questions, or more knowledge or experience being a fiador? Leave a comment and let us know.