This chapter shall be liberally construed to the end that the purpose hereof may be made effective.
Chapter 2Protection of Bond Guarantors
Section § 5100
This section of the law says that its rules should be interpreted in a way that best achieves the law's intended goals. Essentially, it encourages flexibility in understanding and applying the law to ensure its purposes are fulfilled.
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Section § 5101
This law defines the term 'bonds' to include bonds issued by the state, counties, municipalities, or any other public corporations or districts.
As used in this chapter, “bonds” means State, county, municipal, or other public corporation or district bonds.
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Section § 5102
This law defines a 'guarantor' as anyone who promises to pay or buy back bonds or any interest related to those bonds.
As used in this chapter, “guarantor” means the person or persons guaranteeing the payment of bonds, the repurchase thereof, or the payment or repurchase of any interest therein.
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Section § 5103
The term “issuing body” in this context refers to any state entity, like cities, public corporations, or districts, that has the authority to issue regulations or obligations.
As used in this chapter, “issuing body” means the State, any subdivision thereof, municipality, public corporation, or district.
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Section § 5104
This law defines the term "order" within the context of the chapter as any official declaration, proclamation, or order made by an officer or court with the authority to issue such statements.
As used in this chapter, “order” means declaration, proclamation, or order of any officer or court having jurisdiction to make the declaration, proclamation, or order.
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Section § 5105
If a bonded debt or the schedule to repay it is changed—be it reduced, extended, or otherwise altered—the same adjustments apply to anyone who has guaranteed the debt. This means their obligations are adjusted in line with the changes made to the original debt terms.
Whenever by operation of law or by order the bonded indebtedness of any issuing body is reduced in amount, the interest thereon reduced, the time for the payment thereof or of any tax or assessment levied to pay the indebtedness, the interest thereon, or any portion of both or either of them, extended, or any other term or condition for the payment thereof altered, the obligations of all guarantors are reduced as to principal and interest, or either of them, extended as to the time of payment and altered as to any and all terms thereof in the same manner and to the same extent as the obligation or obligations of the issuing body and the tax or assessment payers, or either of them, are reduced, extended or altered.
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Section § 5106
If a government entity fails to pay back its bond debt as required, the responsibilities of those who have guaranteed the debt are automatically extended during this non-payment period. However, this extension cannot last more than three years from when the default starts.
Whenever by operation of law or by order any issuing body defaults in the payment of its bonded indebtedness, the obligations of guarantors shall be extended for the period of the default but not to exceed three years after the commencement thereof.
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Section § 5107
Guarantors are only responsible for covering missed payments specifically related to the principal or interest of the bonds they’ve guaranteed.
The relief of guarantors is limited to the extent of defaults in principal, interest, or both principal and interest of the bonds guaranteed.
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Section § 5108
This law states that if someone is acting as a trustee and is responsible for holding and managing bonds, they must distribute the interest and principal payments they receive to the people who are beneficiaries of the trust.
If the guarantors function in the capacity of trustee or if the custody of the bonds is in the possession of a trustee, and administered by the trustee, he shall be required to distribute interest and principal, in the proportion that each is received by him, to the beneficiaries under the trust.
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