Why should you be aware of a personal guarantee?
You set up your company, established it in the area, and now ready to get a large location to take your business to the next level. You find a location to rent and meet with the landlord’s representatives to hammer out the lease agreement. In reviewing the lease provided to you, you notice it is not only lengthy but also contains this “personal guarantee.” And what is a personal guarantee? A personal guarantee, in short, allows the landlord to come after the owner or the signor of the lease personally for any debts (such as rent or damage to the leased location) owed to the landlord by the business tenant if the company does not or cannot pay the debt.
Now, you probably are wondering, what is the point of having a corporation if you cannot limit liability in the business? Well, that is exactly what landlords want to avoid… limiting their ability to collect.
Keep in mind, the corporation (or LLC) will still protect from other issues that do not have a personal guarantee (you may sometimes see a personal guarantee when financing certain purchases of equipment or leasing of equipment). So, having a corporation is still a good decision. However, when dealing with a personal guarantee, it is important to your rights and what options you have available to you.
Benefits of an attorney reviewing a lease
- Attorneys know the law and can confirm the document is legally enforceable.
- The lease agreement has the clauses the parties want as intended.
- Can potentially avoid litigation by having it drafted correctly.
How long does it take to review a lease with a Personal Guarantee?
Approximately 2-3 business days*
*Depending on Specifications
Why our firm to review your lease with a Personal Guarantee?
At SG Law Group, we are familiar with personal guarantees and can help determine what steps can be taken to eliminate or alleviate the situation. Have questions? Give us a call to see if we can help.
Hire an affordable, professional Attorney to properly review all of your important legal agreements Before You Sign them!