Personal Guaranty’s in Commercial Leases

Our firm represents many small businesses including start up enterprises. With our help, they typically establish a corporation or limited liability company both to protect the owner(s) from unforeseen business liabilities and for certain tax advantages. Despite setting up this shield, most small business owners expose themselves to personal liability for claims arising out of the lease for the space used for their business. Many landlords will not agree to rent to a new business or a small business without a personal guaranty for the rent, common area expenses, real estate taxes and insurance obligations a tenant typically agrees to pay. It has been our experience, however, that many landlords will negotiate a limitation of a personal guaranty. If they are signing a long term lease, the owners of the business should not take on personal liability for the lease beyond the first few years of the term. Once the tenant has established a good history of payment, the landlord should no longer need the assurances a personal guaranty would provide. If you need help negotiating a lease for your business, feel free to contact our business attorneys for assistance.