Search Site
Menu
The Personal Guaranty of a Commercial Lease: A Tenant’s Perspective

For many of our clients entering into a commercial lease as a Tenant, the Landlord will often require that one or more of the principals or owners in the endeavor sign a personal guaranty.  In most cases, unless the company is a large national company with an established track records, Landlords will refuse to lease the space without a personal guaranty.

What is a personal guaranty?  Simply put, a personal guaranty on a commercial lease, as its name implies, is a legal document wherein guarantor(s) will be liable for the payment (and often performance) under the lease should the Tenant fail to pay or perform. The guaranty is typically a separate contract from the lease, although the guaranty can actually be a part of the lease itself. A personal guaranty is typically drafted very broadly in the Landlord’s favor and usually makes the guarantor personally liable for anything that the Tenant is liable for under the lease.  Most personal guaranties state that the Landlord can proceed immediately against the guarantor in the event of a default under the lease and need not pursue the Tenant at all.  This is important for a Landlord particularly when the Tenant is an entity.  Without a personal guaranty, the Landlord would usually only be able to pursue a claim against the entity in the event of a default, but not the owner(s) of the entity personally.  A personal guaranty allows the Landlord to pursue both the entity and the guarantor (typically the owner of the company) if the Landlord chooses.

Should I sign a personal guaranty?  A lease negotiated on behalf of a Tenant that does not require a personal guaranty would be ideal, but not likely in today’s market.  In most cases, from a Tenant’s perspective a personal guaranty is a necessary evil when it comes to commercial leases.  Though the personal guaranty requirement may not be negotiable from a Landlord’s perspective, some aspects of the guaranty may be negotiable, particularly if the Tenant has a solid rental and business history and if the Tenant’s attorney is experienced in representing and negotiating commercial leases on behalf of Tenants.

In certain circumstances we, at the Strong Firm P.C. have been able to negotiate limits to the time, scope, and even amount of the personal guaranty in favor of our clients.   As with all legal documents, it is critical to have any personal guaranty, as well as the commercial lease that it is supporting, reviewed by a qualified attorney to make sure that you are protected to the maximum extent possible.

Eric R. Thiergood, Sr.

Phone: 281-367-1222

Fax: 281-210-1361

[email protected]

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact a Dedicated Texas Business Lawyer To Schedule a Consultation
Call 281-367-1222 or contact us online to schedule a meeting.

Strong In Action

  • Spring 2019

    The Strong Firm represents borrower in $42.3 million HUD construction loan for multifamily real estate development in Walton County, Florida.

    Read More
  • Spring 2019

    The Strong Firm acts as legal counsel for borrower in $32.1 million HUD construction loan for multifamily real estate development in Conroe, Texas.

    Read More
  • Spring 2019

    The Strong Firm aids borrower in $31.7 million HUD construction loan for multifamily real estate development in Nueces County, Texas.

    Read More
  • Spring 2019

    The Strong Firm represents borrower in the refinancing of a $3.57 million commercial mortgage-backed security for a commercial office facility in Montgomery County, Texas.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  • Peer Rated 2019 Award

Recent Blog Posts

2019 Legislative Update – Texas POA Laws

In odd numbered years, Texas property owners associations (POAs) must consider any new laws affecting POAs that became effective following the Texas legislative session earlier that year. For 2019, a few such laws recently went into effect specific to residential POAs (but excluding condominium associations). HOUSE BILL 234 – Protection of
Read More
2019 Legislative Update – Texas POA Laws

Wrapping Up a Decade: Meaningful New Year’s Resolutions

As 2019 comes to a close, it’s a good opportunity to reflect on what we’ve accomplished and make resolutions for what we hope to do in 2020. I have never been a fan of New Year’s resolutions as they often seem like short-term, immeasurable goals. Things like “I am going
Read More
Wrapping Up a Decade: Meaningful New Year’s Resolutions

Not Worth the Paper It’s Written On

We have all heard the saying that something is “not worth the paper it is written on.”  This is usually said about a contract that is unenforceable or even if enforceable, it may have no value because the party has no ability to pay or perform under the contract.  Many
Read More
Not Worth the Paper It’s Written On

“So…What Happens to My Bitcoin When I Die?” Modern Estate Planning for Digital Assets and Cryptocurrencies

Millennials have complicated everything. Socializing in person wasn’t enough, so they created Facebook. Dollars weren’t enough, so they created Bitcoin. Every new app, technology or cryptocurrency brings with it more uncertainty legal uncertainty around these digital assets. Are they currency? Are they property? Can they be gifted? Can they be
Read More
“So…What Happens to My Bitcoin When I Die?” Modern Estate Planning for Digital Assets and Cryptocurrencies
  • Video Vault


    Watch videos done by our legal team to gain a better understanding of your legal needs. Our lawyers give video insight into areas such as Real Estate, Business Law, Mergers & Acquisitions and much more.

Pay Retainer Online

Use our easy-to-use and secure online payment feature.
We accept all major credit cards.

Pay Your Retainer

Contact us

Quick Contact Form