Landlord Considerations When Navigating Personal Guarantees in Bankruptcy

When a business leases commercial space, it is common practice for the landlord to request that the company provide
a personal guaranty, a protective measure taken to ensure landlords have recourse against a commercial lessee if there is a default under the lease. In this way, landlords mitigate financial losses.

A personal guaranty gives the landlord the ability to recover any losses from the personal guarantor if the commercial lessee breaches its lease agreement by failing to pay rent. In that instance, the landlord can seek to recover the unpaid rent from the personal guarantor. The personal guarantor is often the principal or manager of the business.

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