Posted by: Scott Shanks, SIORSenior Vice President Office Properties Group
775 336 4671
During his career, Scott has worked with clients such as: Barnes & Noble, GM, Merck Pharmaceutical, Henry Schein, Home Depot and Ahold to facilitate their real estate needs.
Even though it seems like forever ago given the downtrodden economy, only a short time ago, Landlords didn’t pursue personal guarantees nearly as aggressively as they do now. I certainly don’t blame them in trying to protect their investment and having some sort of collateral in place in the event of default, but it’s pretty tricky in trying to determine who’s financially viable in today’s marketplace. It’s also very difficult on the tenant representation side to recommend to a client that they financially obligate themselves beyond the business level and expose their personal assets. Are there ways around this issue or is there a happy ground that can be met between Landlord and Tenant? Absolutely. One simple suggestion is to seek a “termed” personal guarantee, whereby the personal guarantee is eradicated after a set period of time of faithful performance of the lease obligations. Though at times it becomes a necessity to successfully complete a transaction, if you’re a tenant and are out looking for space or are preparing to sign a lease, seek a professional and look for alternative options before signing a personal guarantee.
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