Explanation of Article 601
The article refers to the second case of the guarantor's recourse against the debtor, which is the claim of subrogation. If the guarantor pays the debt to the creditor, he takes the creditor's place in all his rights against the debtor, including all descriptions of existence, non-existence, termination, prescription, susceptibility to annulment or rescission, and others. He also takes the creditor's place in the securities that guarantee those rights and any defenses related to them. For example, the guarantor takes the creditor's place in his right to claim the debt and the interest resulting from it, and in his right to uphold the real or personal securities or priorities that the creditor has, such as his right to uphold the mortgage or privilege, or the existence of another guarantor. All of this transfers to the guarantor who paid the debt, and it also includes the right to claim any expenses incurred by the creditor for the benefit of the debtor.
For the guarantor to have recourse through subrogation according to the provisions of the article, two conditions must be met:
The first condition: The guarantor must pay the debt on behalf of the debtor. The guarantor cannot have recourse against the debtor before paying the debt, by any means of payment, whether by paying the debt, paying its equivalent, by set-off, or by merger of obligations. However, if the creditor releases the guarantor, or the guarantor's debt becomes time-barred without payment, the guarantor is not considered to have paid or performed an act equivalent to payment, and thus cannot have recourse against the debtor.
The second condition: The guarantor's payment of the debt must occur after its due date. If the guarantor hastens to pay before the debt's due date, he cannot have recourse against the debtor through subrogation until after the due date, unless the early payment by the guarantor is with the debtor's permission. In this case, the guarantor has the right to have recourse against the debtor through subrogation from the time of payment.
If both conditions are met, the guarantor takes the creditor's place in his rights against the debtor, and in all descriptions of those rights, whether existence, non-existence, termination, prescription, susceptibility to annulment or rescission, and others. He also takes the creditor's place in the securities that guarantee those rights and any defenses related to them. These rights also include any expenses incurred by the creditor in confronting the debtor, which the guarantor takes the creditor's place in if he pays them to the creditor.
The guarantor who takes the creditor's place has the right to waive this right, as if the creditor had released him from paying the debt, or if the guarantor's debt became time-barred without payment, or if the debt was originally void, or if the debt was not obligatory.
Related To
Article 601
The debtor shall notify the surety of any reason that entails the termination or invalidation of the debt. If the debtor fails to do so and the surety pays the debt on the maturity date, the surety shall have the right of recourse against the debtor, without prejudice to the surety’s right to have recourse against the creditor in accordance with the provisions of this Law.