What are options to a personal guarantee on a commercial lease?

Financially strong tenant investing substantial amount of own cash into FFE. Very little onsite improvements made to the building, Vanilla shell condition acceptable.
In Leasing Property - Asked by Scott A. - Oct 9, 2014
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Answer(s)

Alex A. G.
Broker/Agent
Miami Beach, FL

When I represent tenants I try to limit the personal guarantee near the front end of the lease, say the first year or two, max. Other options could include a letter of credit from a bank for a limited period of time in lieu of a personal guarantee, or a stronger deposit upfront that can decline over time.
You can make a case for no personal guarantee when the tenant, and not the landlord, is contributing significant dollars to the improvements, provided that there's an inherent value added to the property that will remain with the landlord.

Oct 9, 2014
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marco o.
Broker/Agent
Saugus, MA

I've signed personally on a commercial lease and the business went really bad it caused me a lot of trouble therefore my advice to you is never sign personally Give 3 months security deposit " A PERSONAL GUARANTEE IS A COLLISION COURSE FOR FUTURE PERSONAL BANKRUPTCY " DONT DO IT !

Oct 9, 2014
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Randolph G.
Broker/Agent
Boca Raton, FL

For my clients, I start the search for space with the expectation that there will be NO personal guarantee on any commercial lease. The company alone shall be responsible. A landlord who is looking for some more assurance of rent payment might accept significant prepayment of rent, lower tenant improvement concessions, a 1-year renewable letter of credit (for larger deals), or some other creative way of avoiding the personal guarantee. If the building owner refuses, then perhaps we look to our 2nd choice space for a more flexible landlord.

Oct 10, 2014
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Jeffrey T.
Broker/Agent
Los Angeles, CA

Having a tenant provide a PG is driven by the availability of competing space for rent. in greater LA the Landlords demand and get PG's with very few other rental concessions. The tenant usually has to accept otherwise someone else will take the lease. 4 or 5 years ago the shoe was on the other foot with higher vacancies. The landlord then had to accept the tenants demand or the space would sit empty. Just like everything in real estate "it's negotiable".

Oct 16, 2014
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