What Is a Personal Guarantee on a Lease?
It's the clause that quietly removes the wall between your business and your personal finances — and on commercial leases, it's where the real risk lives.
What you're committing to
A personal guarantee means that if the named tenant defaults, you personally owe what's left. That can include:
- Unpaid rent — for the remaining lease term, sometimes years.
- Damages and costs — repairs, legal fees, and re-letting costs.
- The full term — not just until you leave, but through the lease's end in many cases.
- Personal assets — savings and property can be pursued, not just the business's.
Limited vs. unlimited — negotiate this
Guarantees aren't all-or-nothing. A "good guy" guarantee, for example, can limit your liability to the period until you properly vacate and hand back the space. Others cap the dollar amount or sunset after a period of on-time payments.
Common in commercial leasing, it limits the guarantor's personal liability to rent owed up to the point you give proper notice and vacate — rather than the entire remaining term. If you're being asked to guarantee, this is often the version to ask for.
How to limit your risk before signing
Try to negotiate the guarantee down: cap the dollar amount, limit it to a set number of months, add a burn-off after a period of good payment, or convert it to a good-guy structure. Read whether the guarantee survives assignment of the lease and whether multiple guarantors are "jointly and severally" liable — meaning the landlord can collect the whole amount from any one of you.
Being asked to personally guarantee a lease?
Paste the lease and guarantee into Main AI — it shows exactly how far your personal liability extends and what could be negotiated down.
Analyze your document — freeCommon questions
Does a personal guarantee put my personal assets at risk?
Yes. That's its purpose — it makes you personally liable if the tenant defaults, so the landlord can pursue your personal savings and property, not only the business's assets. It's the main risk in many commercial leases.
What is a 'good guy guarantee'?
It's a limited personal guarantee common in commercial leasing that caps your liability to rent owed up to the point you give proper notice and vacate the space, rather than the entire remaining lease term.
Can a personal guarantee be negotiated?
Often yes. You can try to cap the dollar amount, limit it to a number of months, add a burn-off after on-time payments, or convert it to a good-guy structure. Landlords frequently have more flexibility here than they first indicate.
What does 'jointly and severally liable' mean for guarantors?
It means each guarantor can be held responsible for the entire obligation, not just their share. The landlord can collect the full amount from any one guarantor, who then has to seek contribution from the others.