When a tenant signs a commercial lease as a business entity (i.e. a corporation or a limited liability company), landlords will typically require that the principal(s) (i.e. the individual owner(s) of the tenant entity) or the parent company of the tenant entity sign a guaranty of some or all the tenant’s obligations under the lease.
The guarantor signing any such guaranty should carefully review the obligations imposed by the guaranty. The person(s) or entity signing the guaranty will be responsible for performing some or all of the obligations imposed on the tenant for some or all of the lease term (and possibly any renewal or extension of the lease term). Is the guarantor guarantying certain monetary obligations? What about performance obligations? Is there a right to surrender the premises in exchange for releasing the guarantor from liability after the premises are surrendered? If so, what are the conditions necessary to release the guarantor and does the guarantor have the capacity to personally satisfy any conditions necessary for the guarantor to be released should the need arise?
An experienced commercial leasing attorney can assist a guarantor with reviewing a proposed guaranty as well as requesting commercially reasonable revisions to any such guaranty.[Back to Commercial Leasing]