avalista

An avalista is a person or entity that acts as a guarantor for another party’s obligations, providing an aval or guarantee attached to a financial instrument or contract. The term is used in many civil-law jurisdictions, including Spain, Portugal, and various Latin American countries, to describe someone who pledges to fulfill a debt or obligation if the principal debtor defaults.

Function and types of guarantees: The avalista’s primary role is to assure payment or performance of the debtor’s obligation, which can arise in loans, promissory notes, leases, or other commercial instruments. In many cases, the aval is a formal clause or separate guarantee that creates a secondary or, in some systems, solidary liability. The guarantor may be an individual, a company, or an institution and can be required for particular transactions, especially those judged risky or large in value.

Liability and enforcement: The avalista’s liability is typically defined by the contract governing the guarantee. In many jurisdictions, the guarantor’s obligation is parallel to the debtor’s, allowing creditors to claim repayment from the avalista if the debtor fails to meet the obligation. The extent of liability—whether unlimited or limited to a specified amount or term—depends on the agreement and local law. The avalista may, after paying the creditor, seek subrogation rights to recover what was paid from the debtor.

Risks and implications: Serving as an avalista bears substantial financial risk and can affect the guarantor’s credit standing. Releasing an avalista or modifying the guarantee requires mutual consent and, in some cases, formal amendments to the underlying contract.