Guarantees For Commercial Property Tenancies
Many commercial landlords require a guarantee from new tenants.
Whether you are a landlord, tenant, or guarantor, it is imperative that you obtain expert legal advice to ensure you understand your rights and obligations regarding a commercial property guarantee.
Our Commercial Property Department is one of the most successful and busy in Coventry and Warwickshire and have been advising all parties to commercial leases for many years. Our Solicitors will provide you with clear, practical advice on commercial property guarantees to ensure you are armed with the information you need to make the best decision for you and/or your business.
We are a diverse, multi-lingual law firm that uses best-in-class technology to provide clients with streamlined, modern, and highly effective commercial property law advice and representation. Our years of experience in commercial property law means we have a robust reputation for excellence with the UK’s best Barristers and King’s Counsel, Estate Agents, Independent Financial Advisers, Surveyors, and Lenders who can bring additional support to our Commercial Property Department if needed.
Below are some common questions we are asked about commercial lease guarantees.
What is a guarantee?
A guarantee is a promise by one person (the Guarantor) that another person will fulfil their obligations. If that person fails to do so the guarantor becomes liable to fulfil those obligations which can include paying any relevant outstanding payments not honoured by the third party.
Given the serious consequences facing a guarantor of a commercial lease should the tenant default on their obligations, you should always seek legal advice before agreeing to act as such.
How are guarantees used in commercial leases?
Many commercial landlords are now requiring tenants to provide a personal guarantee in regard to meeting lease agreement covenants such as paying rent and making repairs.
You are more likely to be required to provide a guarantee if you are a startup company or have ‘poor covenant strength’ meaning that for some reason there are concerns that you will be unable to meet the lease obligations.
If you breach any of the covenants under your commercial lease, the landlord can recover money from the guarantor or demand they fulfil the unperformed obligations. In the case of a personal guarantee, you will have to use your own funds to cover the costs.
What is an Authorised Guarantee Agreement?
Most commercial leases require a tenant to seek permission if they wish to assign their lease to a new tenant. Often the landlord will require an Authorised Guarantee Agreement (AGA) in exchange for granting permission. This involves you guaranteeing that the incoming tenant will fulfil their commercial tenancy obligations. If they do not, you will be liable to the landlord.
A landlord can also demand a third-party guarantee from the incoming tenant, thereby benefiting from both this and the AGA.
Why choose us to advise on commercial lease guarantees?
Whether you require warehouse, retail, manufacturing, or office space, entering into and negotiating a commercial lease can seem stressful and overwhelming, especially if a guarantee is required. However, with the right professional advice, things will run smoothly. Our Commercial Property Solicitors will examine the landlord’s terms regarding providing a guarantee and ensure you and the guarantor understand the current and future implications of such a commitment. And if you are a landlord who is concerned about the covenant strength of a tenant or have been asked to permit a lease assignment, we will go through your options and advise on the best way to protect your interests.
We are proud of our personal service to all our clients and where possible we are always available by phone and will respond to your email within 24 hours. As a full-service law firm, we can also provide advice on other commercial matters such as contracts and dispute resolution.
We will leave no stone unturned when handling your commercial property matters. Each member of our team has the experience and resources available to ensure that every aspect of the Guarantor Agreement that requires attention will be spotted, brought to the fore, and managed. You can trust us to provide the commercially-astute advice you need to protect your interests.
Our Solicitors are businesspeople themselves; therefore, we understand that every decision you make must encompass commercial reality. We receive most of our instructions via word of mouth recommendations because business owners in Coventry and Warwickshire are confident that we have the knowledge and dedication required to manage all legal matters concerning commercial tenancy guarantees.
We are focused on results and achieving them in the swiftest, most cost-effective way possible. Our Commercial Property Solicitors will take care of your legal concerns so you can concentrate on your organisation’s future growth and prosperity.
To talk to us about commercial lease guarantees, please contact us using the form below.