Lease Guaranty

Lease Guaranty

Drafts an unconditional guaranty of payment and performance for commercial lease obligations. Ensures enforceability by covering guarantor obligations, waivers, duration, remedies, and execution formalities.

Prerequisites

Gather before drafting:

1. Underlying lease — date, premises, rent, term, renewal options, special provisions (CAM, TI, percentage rent)
2. Parties — exact legal names, entity types, formation jurisdictions, addresses for landlord, tenant, and guarantor
3. Scope — full term vs. initial term only, liability cap (if any), joint and several (if multiple guarantors)
4. Jurisdiction — notarization rules, anti-deficiency statutes, one-action rules, community property considerations

Document Structure

Core Workflow

1. Draft Guaranty Obligations

Explicitly guarantee each:

• [ ] Base rent, additional rent, percentage rent
• [ ] Tax, insurance, CAM, utilities
• [ ] All other monetary obligations
• [ ] Maintenance, repair, and restoration duties
• [ ] Compliance with laws and insurance procurement
• [ ] Indemnification obligations
• [ ] Enforcement costs (attorneys' fees, court costs, collection fees)

2. Establish Payment-Not-Collection Language

Critical: State explicitly that this is a guaranty of payment, not collection. Landlord need not proceed against tenant first, exhaust security, or pursue other remedies before enforcing against guarantor. Guarantor's liability is primary, direct, and immediate.

If multiple guarantors, include joint and several liability language.

3. Enumerate Waivers

Draft each waiver separately:

1. All suretyship defenses (common law and statutory)
2. Right to require landlord to proceed against tenant first
3. Right to require landlord to mitigate damages
4. Presentment, demand, protest, notice of dishonor
5. Notice of acceptance and notice of default
6. Subrogation, reimbursement, indemnification, contribution (postponed until obligations indefeasibly satisfied)
7. Right to participate in landlord's security
8. Marshaling of assets

4. Set Duration

Post-termination survival covers: accrued obligations, indemnification, environmental remediation, restoration, and breach damages.

5. Execute

• [ ] Signature blocks with printed name, title, date
• [ ] Entity authority representation (if entity guarantor)
• [ ] Notarization per jurisdiction (many states require for real estate guaranties)
• [ ] Spousal consent in community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI)
• [ ] Jury trial waiver in ALL CAPS or bold per conspicuousness requirements
• [ ] Counterparts and e-signature provisions

Pitfalls

• Name mismatches — all party names must exactly match the underlying lease; inconsistencies create enforcement risk
• Confession of judgment — prohibited or unenforceable in many states; only include after confirming jurisdiction permits [VERIFY]
• Anti-deficiency statutes (e.g., CA CCP §580d) may limit guarantor liability [VERIFY]
• One-action rules (e.g., CA CCP §726) may affect enforcement sequence [VERIFY]
• Bankruptcy — tenant's discharge waiver is enforceable against guarantor; guarantor's own discharge governed by 11 U.S.C. §523/§524
• Arbitration — if lease has an arbitration clause, explicitly address whether guaranty disputes are subject to it
• Monetary amounts should appear numerically and in words
• Defined terms must be consistent; cross-references must be verified