A GOOD GUY GUARANTY is a limited personal guarantee to a commercial lease agreement.
In the typical small business lease agreement the parties involved are the: (a) landlord, (b) tenant who is typically a corporation or limited liability company; and (c) individual shareholder / owner of the corporate tenant.
Since most small businesses do not possess substantial assets or a complete earnings track record most commercial landlords require their small business lease agreements to be guaranteed by the "individual" shareholder / owner of the corporate tenant.
A "good guy guarantee" refers to the limited personal guarantee of the corporate tenant's individual owner. Although the form of this "good guy" guarantee is subject to variation it provides for the termination of the "individual personal guarantee" upon the satisfaction of the following "good guy" acts:
- providing the landlord with pre-notice of the termination / breach of the lease agreement;
- surrender of the business premises in good and proper condition; and
- satisfaction and payment of all past due rent and additional rent obligations.
The benefit of a "good guy guarantee" is that an individual guarantor will not be liable for "future lost rent" in instances involving the early termination / breach of the lease agreement.