Not every Tenant pays their rent. While it is unfortunate that this happens, a Landlord should still have the ability to collect the rent. Therefore, it is important that they include a Personal Guaranty in their Commercial Lease. If you have questions about the advantages of a Personal Guaranty, contact 954 Eviction Attorneys, PLLC at 954.323.2529.
The Importance of a Personal Guaranty in a Commercial Lease
When some Tenants are no longer able to pay their rent, they vacate the property. In addition, they may close their company and bank accounts. Accordingly, this makes it difficult for the Landlord to receive the past rent. On the other hand, if a Guaranty is included, they have an avenue to collect. In other words, even though the Company shut down, a Landlord can still go after the Individual that signed the guarantee. For example, they may own a property or assets that a Landlord can collect on.
It should be carefully written
While it may seem straightforward that a guaranty should be in a Lease, Landlords need to be careful. Specifically, the Guaranty should not state that the Individual is signing on behalf of the Company. It should be clear that they are guaranteeing payment if the Company fails to pay. There should be no reason that the individual that signed the Guaranty be able to defend any collection efforts against them. Further, it is important the Landlord obtain all bank account information from the Guaranty before signing the Lease to expedite their collection efforts.
A Judgment must first be obtained to collect
As stated, a Landlord needs to include a Guaranty in the lease. However, to collect, they need to obtain a Judgment. This occurs when a Landlord files an Eviction against the Tenant and the Personal Guaranty. It should include a count for Possession and damages. This is also known as past due rent. While possession does not require personal service, it does for damages. Therefore, if they are personally served, the Landlord will be able to obtain a Monetary Judgment against them.
It is without question that a Commercial Lease should include a Personal Guaranty. It provides the Landlord the best opportunity to collect the past due rent in the event that the Company does not pay. Landlords should contact 954 Eviction Attorneys, PLLC at 954.323.2529 to learn the importance of a Personal Guaranty in their Commercial Lease.