Personal guarantees – landlords don’t have to wait

  • Personal guarantees in leases

When explaining the effect of a guarantee in a lease, many guarantors think that the landlord can call on a personal guarantee only after all other avenues of recovering the debt have been exhausted – such as selling the business and its assets.


Landlords have the right to call on a guarantee as soon as a tenant defaults. That’s just one missed monthly rent payment.

It’s up to the landlord to decide whether to seek to recover their debt from the assets of the business before looking to the personal guarantors for any shortfall.

Bear in mind that, under a lease, the tenant and the guarantor are liable to pay rent until someone else takes over the lease.

What’s a guarantee?

A personal guarantee is an agreement from one person to pay the liabilities of some third party.

Very common in leases. Normally required of the company’s director


Know what you’re getting into

If you’re being asked to give a personal guarantee, speak to us before signing anything.

By | 2017-06-01T13:06:14+11:00 8 July 2016|Categories: Fact sheets|Tags: , , , , , , , |

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