What Are The Risks Of Being A Guarantor On A Commercial Lease?
There are a number of risks involved in being the guarantor on a commercial property lease, primarily the legal responsibility to continue payments for the full duration of the contractual agreement, whatever the circumstances.
We are often asked for legal advice before signing as a guarantor to a commercial lease. This is not surprising as company directors, business associates or family members may agree to guarantee a commercial lease, and where the business is forced to close before the agreement has run its course, the guarantor may then have to continue making rent payments, as well as fulfil any other obligations for the remainder of the lease period, sometimes for a number of years into the future. This can have a dramatic effect on the finances of the guarantor, especially when the original tenant has ceased trading and can contribute nothing towards the lease payments.
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