Legal Question in Real Estate Law in California

I do not understand what type of document you speaking about. Why would you be a guarantee on a loan to an LLC that you do not appear to be a member of; the purpose of an LLC is to eliminate personal liability, so why sign in your "personal" capacity?

The lack of a signature or initials on a page does not void the agreement. The purpose of the initials is to demonstrate you were shown the page. Nor does there have to be a wiltness or notary. What might make it voidable is that you did not know the terms of the agreement because you did not see the first page. If you previously had been told the contents then the contract would be binding. Whether it is a fraud depends upon what the intent of the manager was and his knowledge of what you knew.

First, it isn't at all unusual for directors, officers, major stakeholders, members, managers, partners, etc. to be required to execute a personal guarantee for repayment of loans or trade indebtedness to/of their small corporations, LLCs, partnerships, etc. - it's probably less common with partnerships because partners are already jointly and severally liable to third-party creditors, but with LLCs and small (not creditworthy) corporations, it's commonplace.

Next, let's consider the question of fraud, since absence of fraud is an sub-element of enforceability. Fraud generally consists of the misrepresentation of a material fact, made with the intention of deceiving another; the victim's reasonable reliance on the deception; and harm resulting from the reliance. This is not the only possible definition of fraud, but it's the most usual. See Civil Code sections 1571 to 1574 for some statutory definitions. It would seem that if there were any fraud here, it would be primarily on the bank, if it thought it had a valid guarantee of its koan, but really didn't. You could also be a victim of the fraud, but if your position is that you didn't sign these papers, maybe your defense is forgery, not fraud.

My guess is that you are somehow connected with this LLC, maybe as an investor not active in the day-to-day affairs. The LLC needed a bank loan, and the bank told the LLC that it would make the loan, but only if Mr. X (you) would guarantee it personally. A guarantee document was drawn up, shown to you, you signed it on page 5 and initialed on pages 2, 3 and 4, or perhaps on 1, 2, 3 and 4. Then, somewhere along the line, page 1 was modified, or maybe it was never intended to be initialed, so in the currently-existing version of the guarantee, it is not initialed by you.

Now, the bank is seeking to enforce the guarantee against you, and your proposed defenses are (1) incomplete execution, and (2) fraud.

As to the incomplete execution defense, I think that is a loser, except that the incomplete execution (lack of initials on page 1 might be evidence of fraud. Guaranty agreements are rarely notarized, and initialing pages is not essential.

As to the fraud defense, if you can prove that someone did a switcheroo of the original page 1 so as to get a bigger loan, or the amount of the loan was misrepresented, this might be a defense. If this goes to a lawsuit, in discovery you lawyer would need to obtain the bank's and the LLC's complete files regarding this loan, to see whether, for example, it started out as a request for $200,000 and ended up at $500,000. Also, the dates various papers (such as the guarantee) were executed, dated, etc. could tend to show, or disprove, fraud.

Is there anything strikingly inconsistent between pages 2 - 5 and the current page 1? That could be a sign of fraudulent tampering with the document.

Finally, there would be your testimony. Can you honestly testify that page 1 now reads differently than it did at the time you initialed or signed the other pages? What evidence may show otherwise, impeaching your testimony?