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Commercial Lease Personal Guarantee — Understand Your Personal Liability Before Signing

A personal guarantee in a commercial lease makes you personally liable for the business's rent obligations — meaning the landlord can come after your personal assets if the business can't pay. Personal guarantees in commercial leases are often treated as standard, but the scope, duration, and burn-down terms are negotiable. Revealr flags what you're personally guaranteeing, for how long, and whether the guarantee includes any limitations or carve-outs.

  • Full clause-by-clause review — every section, not just the highlights
  • Risk score 0–100 — understand severity at a glance
  • Plain-English explanations — no legal jargon required
  • Specific action steps — exactly what to negotiate or ask
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What a Personal Guarantee Puts at Risk

What Revealr checks in your personal guarantee terms

Scope of personal liability
Whether you are liable for rent only, or all lease obligations including damages and legal fees
Guarantee duration vs. lease term
Whether personal liability lasts for the full lease term or a shorter period
Burn-down or step-down provisions
Whether personal liability reduces over time as the landlord gains confidence in the tenant
Joint and several liability with co-guarantors
Whether each guarantor is fully liable for the entire obligation
Release conditions
What events or milestones trigger expiration or release of the personal guarantee

Burn-Down Clauses and How They Reduce Your Exposure

Here is what a Revealr analysis looks like for a real Commercial Lease Personal Guarantee.

R
Revealr Analysis
Commercial Lease Personal Guarantee
Risk Score
74 / 100
CRITICAL§22.1
Full Personal Guarantee for Entire Lease Term

You are personally liable for all rent and lease obligations for the full 5-year term with no burn-down provisions. If the business fails in year 4, you remain personally liable for the remaining rent — potentially $200,000+.

→ Negotiate a burn-down clause reducing personal liability annually, or cap the guarantee at 12–18 months of rent.
WARNING§22.4
Personal Guarantee Survives Business Sale

The personal guarantee remains in effect even if you sell the business or transfer the lease to a new tenant, unless the landlord specifically releases you in writing. Without a formal release, you remain exposed after exit.

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How to Negotiate a Personal Guarantee Before Signing

Business owners signing commercial leases
You are about to sign a commercial lease and want to understand your personal liability
Entrepreneurs signing their first commercial lease
You want to know what the personal guarantee means for your personal finances
Business owners planning to sell
You want to understand whether your personal guarantee obligation transfers on a business sale

Personal guarantees in commercial leases routinely expose business owners to hundreds of thousands of dollars in personal liability. Understanding and negotiating the guarantee terms before signing is one of the highest-ROI actions a business owner can take.

Frequently Asked Questions

It means that if your business fails to pay rent or fulfill lease obligations, the landlord can pursue you personally — including garnishing wages, placing liens on property, or suing for the full outstanding balance. Your personal assets are at risk.

Yes. Common negotiation points include: a 'burn-down' clause reducing personal liability over time, a cap on the guaranteed amount (e.g., 6–12 months of rent), release of the guarantee after the business achieves certain revenue milestones, and exclusion of personal liability for tenant improvement buildout costs.

A burn-down (or step-down) guarantee reduces your personal liability over time as the lease continues. For example, you might be personally liable for 24 months of rent in year 1, reducing to 12 months in year 3, and eliminated after year 5. This protects you as the landlord gains confidence in the tenant.

The guarantee typically remains in effect unless the landlord specifically releases you. Buyers of a business often assume the lease but may not assume the personal guarantee — leaving the original guarantor exposed. Always negotiate a guarantee release as part of a business sale.

Related tools & guides

Lease Agreement AnalyzerLease Red Flags Before SigningContract Risk CheckerHow to Review a Lease Before Signing

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Personal guarantee enforceability varies by state. Consult a commercial real estate attorney before signing any lease with a personal guarantee clause.