Guarantors on a Retail Lease

TripleDrawTripleDraw subscriber Posts: 1
edited August 2008 in Business Planning
I am attempting to get a lease signed as the tenant but have come accross a slight hurdle.  There is a component to the guarantee section that forces the guarantor to be liable for the life of the lease, which basically will continue to exist once I sell the business, sublease or turn the space over to a different business.  Some have said this is standard and I`ll need to negotiate this point with the new tenant.  However my attorney said this is a bad idea and needed it removed.  I would greatly appreaciate any comments on this topic.  Thanks. TripleDraw2008-8-6 12:41:36

Comments

  • pepperlegalpepperlegal subscriber Posts: 2 Member
    Obviously, if you can get this removed you should, although it is a relatively common provision in commercial leases, especially if the tenant represents a new business or does not have established credit.
    If you can`t get it removed, I typically attempt to narrow the guarantee to no more than a year or two from lease inception, with the argument that if the rent has been paid on time during that time, a guarantor is no longer necessary.  I do agree with your attorney that having the guarantor remain liable even after an assignment to a third party is unreasonable.pepperlegal8/7/2008 11:17 AM
  • posylaneposylane subscriber Posts: 1
    You definitly don`t want to be liable for the life of the lease if your plan is to exit the business scene.  You don`t know what will happen once you are out of the picture.
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