Structuring Commercial Real Estate Lease Guaranties: Good Guy Guaranties and Guarantor Waivers and Limitations

Commercial real estate landlords often require a personal or corporate guaranty covering the tenant’s lease obligations. Both landlords and tenants must completely understand the principles in lease guaranties, the scope of the guaranty, and the impact of default and remedy provisions on the guarantor.

The “good guy” guaranty is a limited personal guaranty that has become commonplace in commercial leases. This clause provides that in the event of the tenant’s default, the individual guarantor is responsible for the lease obligations until the tenant fully vacates the space. This incentivizes the tenant to vacate the space quickly so that the landlord can find a new tenant.

Good guy guaranties will vary in language and scope but there are several standard requirements, including notice period to the landlord, complete surrender of the space in clean condition and free of subleases or other licenses, and tenant being up to date on rent and other charges.

Listen as our authoritative panel of real estate practitioners analyzes the use, purpose and forms of commercial real estate lease guaranties. The panel will discuss differences between full and limited guaranties, including the commonly used "good guy” guaranty. The program will also look at the impact of lease default provisions and remedies on the guarantor.

1. Evaluating whether a personal lease guaranty is warranted for a specific deal
2. Full vs. limited guaranty
3. Good guy guaranties
4. Limitations on guaranty coverage
5. Limited guaranty periods: rolling or stationary?
6. Lease default and remedy provisions: impact on the guarantor

The panel will review these and other key issues:

• What scenarios would require a lease guaranty and what factors should landlords and tenants consider in framing the necessity and scope of the guaranty?
• What are the benefits of the “good guy” guaranty and what provisions should be included?
• What issues in lease guaranties most commonly give rise to disputes between the parties and how can the parties draft the guaranty to minimize later disputes?