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Contracts

Personal Guarantee

A promise making you personally liable for a debt or lease.

A personal guarantee makes you individually responsible if a business or tenant can’t pay — putting your personal assets at risk, not just the company’s. On commercial leases especially, this is where the real exposure lives. A “good-guy” guarantee can limit liability to the period until you properly vacate.

In practice

Signing a lease “as guarantor” means the landlord can pursue your savings if the business defaults.

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The clause that reaches past your LLC

A personal guarantee makes you individually liable for a business obligation — your house and savings behind the company's lease or loan. Check the scope (this lease only, or 'all obligations now existing or hereafter arising'?), whether it's unlimited or capped, whether it's a guarantee of payment (creditor can come straight to you) or of collection (they must exhaust the business first), and — critically — the termination mechanics: many guarantees survive the sale of the business unless formally released in writing. 'Good-guy' guarantees in commercial leases limit exposure to the period before you surrender the space; the wording of the surrender conditions is everything.

See this clause in your own document: run a free analysis — findings quote the exact language.

What it looks like in a real contract

“The undersigned personally and unconditionally guarantees full payment and performance of all obligations of the Company under this Agreement.”

This sentence pierces your LLC. If the business can't pay, you personally owe it — house, savings, everything. Negotiate limits: a dollar cap, a time limit (“burns off” after 24 months of clean payment), or carve-outs. Signing one casually is the single most common founder contract mistake.

Related: Founder contract check · Contract basics