What Does A Guarantor In A Commercial Lease Do?
A guarantor in a commercial lease essentially gives a "personal guarantee," which will finalize a commercial lease agreement. When starting a business in New York, a commercial landlord may ask you to give your "personal guarantee" because most small businesses do not have substantial assets to guarantee their financial obligations. A personal guarantee is the only thing that will satisfy a commercial landlord.
If you are starting a business in New York, and your landlord is requiring you to give a personal guarantee before signing a commercial lease, you should get the professional help of a New York business attorney.
When a landlord requires a personal guarantee for your business in New York, your New York business attorney may be able to negotiate what is known as a "good guy" clause. This may limit the scope of your personal guarantee to past due rent, so that you're not responsible for any future lost rent.
Unless specified in the New York commercial lease agreement, the good guy clause might apply to you, the guarantor, but not to your corporate entity. The good guy clause basically limits the scope of your personal guarantee should you need to end your commercial lease early. Talk to your business attorney about how to prevent your corporate entity from being held liable for breaking the commercial lease.
You may need the advice of an experienced New York business attorney to see if you are even eligible for a good guy clause should a personal guarantee be required. In some cases, if you have multiple New York business locations and assets, your New York business attorney may need to explore other options to help you protect your business in a commercial lease.
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