A personal guarantee clause is a provision by which an individual — typically the principal owner or officers of the tenant entity — unconditionally guarantees all obligations of the tenant under the lease. If the tenant entity defaults, the landlord can pursue the guarantor's personal assets (savings, investment accounts, real estate) to satisfy the lease obligations, bypassing the limited liability protection of the corporate entity.
By Angel Campa, Founder · Updated March 2026
Personal guarantees pierce the corporate veil for lease purposes, exposing individual owners to potentially unlimited liability for the full remaining rent obligation if the business fails. A five-year lease at $100,000 per year with an unconditional personal guarantee means the guarantor has personal exposure of up to $500,000 in the event of a default in year one — a life-altering financial obligation for most small business owners. Personal guarantees are most common for startup businesses, businesses without sufficient financial history, or high-risk tenant profiles.
Push to limit the guarantee amount to a fixed dollar cap (e.g., 6 months' rent), a defined period (e.g., guarantee limited to the first 3 years of the lease term), or a declining balance structure (guarantee amount decreases as the tenant demonstrates performance). Alternatively, negotiate a "Good Guy Guarantee" as a less onerous alternative that terminates the guarantor's liability upon proper vacation of the premises. Seek to include multiple guarantors to dilute individual exposure, and push for automatic termination of the guarantee if the tenant meets defined performance milestones (e.g., 24 months of timely payment).
Full-term unconditional guarantee (most landlord-favorable), capped guarantee limited by amount or period, "Good Guy" guarantee terminating upon proper vacation, multiple-guarantor provisions, and burn-down guarantees with declining exposure over time.
Lextract extracts these fields directly from your lease PDF when this clause is present:
Good Guy Guarantee
A Good Guy Guarantee is a modified personal guarantee that limits the guarantor's liability to the period during which the tenant is actually in possession of the premises.
Assignment and Consent Clause
An assignment and consent clause governs the tenant's ability to transfer its entire leasehold interest to a third party (assignee) who then becomes the new tenant under the lease.
Subletting and Sublease Consent
A subletting and sublease consent clause governs the tenant's ability to lease all or part of the premises to a subtenant (sublessee) while the original tenant (sublessor) retains the primary lease obligation.
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