When drafting a commercial lease, it is important for landlords to include a personal guaranty for the commercial lease provision because it protects the landlord in the event the tenant stops paying rent.
Limited/ Good Guy Guaranty
A limited personal guaranty is a lease provision that only holds the guarantor liable for the rent obligations under the lease for a certain time period. A good guy guaranty is a type of limited personal guaranty that only holds the guarantor liable until the date the tenant surrenders the leased property, instead of being liable for the entire lease period. Such a personal guaranty commercial lease serves to protect landlords from costly litigation against non-paying tenants because it motivates non-paying tenants to vacate the premises immediately in order to avoid being personally liable for any additional rent payments.
Unlimited Guaranty
An unlimited personal guaranty makes the guarantor, usually the business owner, personally liable for any lease payments that the business fails to pay under a commercial lease personal guarantee.
James G. Dibbini & Associates, P.C. has over 27 years of experience drafting and negotiating commercial and residential leases. We can draft and negotiate a lease that will protect you and your property if a problem arises. Call us today at (914) 965-1011 to get started in obtaining assistance with your new tenancy.
Why a commercial lease personal guarantee matters
A commercial lease personal guarantee ensures that lease obligations are taken seriously by the tenant and guarantor alike. This structure supports smoother lease enforcement and provides reassurance that the landlord’s rights are protected throughout the tenancy.
FAQs
- What is a personal guaranty in a lease?
It makes an individual responsible if the tenant does not pay rent. - Are personal guaranties common in commercial leases?
Yes, especially for small or closely held businesses. - Can a guaranty be limited in time?
Yes, some guarantees apply only until a set date or event. - Who usually signs the guaranty?
Typically, the business owner or managing principal. - Does vacating the property end all guarantees?
Only if the lease specifically allows it. - Are guarantees legally enforceable?
Yes, when properly drafted and signed. - Can guaranty terms be negotiated?
Often yes, depending on the lease and parties involved. - Should a lawyer draft or review guaranty clauses?
Yes, legal guidance helps avoid costly issues later.
