Video: Commercial Real Estate Financing & Personal Guarantees
Start Transcript: Commercial Real Estate Financing & Personal Guarantees
In commercial leases you will usually see, unless the tenant is really well established and an excellent credit risk for the landlord, you will usually see the landlord requiring the individuals who own the business to personally guarantee the lease.
You need both members of the marital community to sign. If you don’t you’re gonna have a really big problem from the lender or landlord’s side, and this is another area in which mistakes are frequently made, because you’ll have a lot of landlords, in fact, you’ll probably see it here more than anywhere. You’ll have landlords who have significant commercial holdings all over the country and they have a building or two here in Arizona, and it’s just not enough for them to have gotten the familiarity with Arizona law. When they signed the lease, they didn’t involve their counsel. They said, “Ah, we know what we’re doing here. We’ve done this a hundred times on a hundred other buildings. And we’ve got all of our forms and they use the same forms that they use everywhere else”.
The problem is that guarantee form that they’ve got, it doesn’t have a place for the husband and wife to sign. It’s only got a place for the husband to sign. It comes time to enforce that guarantee and they are very disappointed to find out my guarantee is not worth the paper it’s printed on.
So go back and watch my video regarding the importance of both members of the marital community sign any personal guarantee.