Commercial lease · free guide
Personal guarantee on a commercial lease
A personal guarantee means if the business cannot pay, the landlord can pursue you personally. That can reach beyond the LLC you carefully formed.
Guarantees are common for small tenants. Unlimited, forever guarantees are a choice, not a law of nature.
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Before ClausePrep
The broker is friendly and fast. Rent looks fine. You feel behind, like everyone else already knows the game.
After ClausePrep
You can price total occupancy cost, name the traps (CAM, guarantee, HVAC), and negotiate without apologizing for asking.
Negotiate these points
- Dollar cap on the guarantee.
- Time limit or burn-off after 12 to 24 months of on-time rent.
- Release on assignment if the landlord accepts a replacement tenant.
- Carve-outs so you are not guaranteeing landlord negligence.
- Good-guy style constructs where applicable in your market.
Why landlords ask
New entities have thin credit history. The guarantee is their backup plan.
Your counter is performance: deposit, stronger financials, shorter initial term, or burn-off after proven payment.
What to read carefully
Does the guarantee cover only rent, or also damages, fees, and free rent clawbacks?
Can the landlord modify the lease without your consent and still keep you on the hook?
Free sample for this situation
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Commercial lease · Step 1 of 3
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Questions
Does an LLC protect me if I signed a guarantee?
The guarantee is the exception you agreed to. Entity protection does not cancel a signed personal guarantee.
Should my spouse sign?
Often requested, not always required. Adding a spouse expands household risk. Get advice before dual signatures.
Educational content only. ClausePrep is not a law firm and does not provide legal advice. For material decisions, consult a licensed professional in your jurisdiction.