• September 13, 2020

Key Takeaways: Exit Strategies from a Good Guy Guarantee

Key Takeaways: Exit Strategies from a Good Guy Guarantee

Tenant Advocates: Tenants, and more particularly, guarantors, need to keep in mind that virtually all guarantees contain language that the guarantor will remain on the hook when the lease is assigned. So tenants and their guarantors need to create as much flexibility for themselves as they can and attempt to include provisions that will allow for the release of the guarantor if a sale of the business or an assignment of the lease occurs, subject to having at least one or more of the principals of the assignee that you assigned the lease to signing a GGG in similar form to what you signed.

Tenant Advocates: Another detail that I will seek to put into the GGG – and I put this in the LOI if I’m representing a tenant – is when more than one principal will be signing as a guarantor, that if one of those principals later withdraws from the corporate tenant, the obligations of the withdrawn member under the guaranty may be terminated unilaterally by that withdrawn party, provided that the remaining guarantors remain as guarantors.

Tenant Advocates: You should try and limit the definition of additional rent in the GGG to taxes, or if you have an operating expense clause in your lease, taxes and operating expenses.

Terms of Use, Refund Policy & Privacy Policy