Personal Guarantee on a Commercial Lease in California

Your LLC or corporation is supposed to keep business debts away from your personal assets. A personal guarantee on a commercial lease can undo that. If the business cannot pay, the risk can reach past the business to your home and savings.

CSD Business Law reviews and negotiates commercial leases for California tenants, including the guarantee, so you know exactly what you are signing for and for how long.

Take the Legal Priorities Quiz
  • Plain-language lease review
  • Fixed fees where possible
  • Serving tenants throughout California

How We Help With a Lease Guarantee

Guarantee Review

We read the guaranty form and the lease together and explain what you would personally owe, and when.

Negotiating the Terms

We ask for limits that fit your deal, such as a cap on the amount or an end date, and propose language the landlord can accept.

Renewals and Amendments

We check whether a renewal, expansion or amendment quietly extends your personal exposure.

Selling the Business

We help plan how a guarantee is handled when the lease transfers to a buyer, so you are not left on the hook after you sell.

Exposure You Already Have

If you already signed, we explain what your guarantee allows and what your options are.

Who This Is For

  • Owners about to sign a new office, retail, restaurant or industrial lease
  • Tenants asked to sign a guarantee with a renewal or amendment
  • Owners who formed an LLC and assumed it protects them from the lease
  • Business partners who are each being asked to guarantee
  • Owners planning to sell the business and transfer the lease
  • Anyone who signed a guarantee years ago and is not sure what it covers
Quiet boardroom with two chairs facing each other across the table

What a Personal Guarantee Really Means

Landlords often ask for a personal guarantee when a business is new, small, or does not have a long financial history. The guarantee is a separate promise by you, personally, to pay what the business owes under the lease if the business does not.

That can include more than rent. Depending on the wording, it may cover operating expenses, repairs, the landlord’s legal fees and the rent for the rest of the term. A guarantee that looks routine on signing day can become the largest personal debt an owner has if the business struggles.

Whether you are personally on the hook if the business cannot pay, and for how long, is one of the first things we check in any commercial lease.

What We Look at First

Guaranty forms vary a lot. These are the terms that usually matter most.

Whether the guarantee covers the entire lease obligation or is capped at a set dollar amount or number of months of rent.

Whether the guarantee lasts for the full term and every renewal, or ends after a period of on-time payment.

Whether the guarantee covers rent only, or also operating costs, repairs, damages and the landlord’s attorney fees.

Whether the landlord must go after the business first, and which legal defenses the form asks you to give up.

If several owners sign, whether each one can be held responsible for the full amount.

Whether the guarantee continues after you sell the business or the lease is assigned to someone else.

California Points Worth Knowing

  • Your LLC does not cover a guarantee. A personal guarantee is your own promise, separate from the business entity, so the entity’s liability protection generally does not apply to it.
  • Guaranty forms often include waivers. California guaranty forms commonly ask the guarantor to give up defenses they would otherwise have. Read these sections before you sign.
  • Smaller tenants have added protections. Since January 1, 2025, California law (SB 1103) gives certain small businesses, restaurants and nonprofits added protections, including rules on how landlords charge for building operating costs. Whether your business qualifies depends on its size and type.

Guarantee Mistakes We Help Owners Avoid

These are the mistakes we see most often.

  • Assuming the LLC protects you. A personal guarantee is the exception that lets the landlord reach you directly.
  • Treating the guarantee as standard. The first draft usually reflects what the landlord wants. Limits are often worth asking for.
  • Not reading the guarantee with the lease. The guarantee usually covers whatever the lease makes the tenant owe.
  • Missing the renewal. Renewals and amendments can extend a guarantee without much notice.
  • Selling without a plan for the guarantee. A buyer may take over the lease while your guarantee stays in place.
  • Waiting until the business is behind on rent. By then, there is far less room to negotiate.

How It Works

1. Take the Legal Priorities Quiz

Answer a few questions about your business and see which legal issues to tackle first.

2. Send Us the Lease and Guaranty

Share the draft lease, the guaranty form and the letter of intent.

3. We Flag the Risks

You get a plain-language explanation of what you would personally owe and a list of changes worth asking for.

4. We Negotiate

If you want us to, we work directly with the landlord or their attorney.

5. You Sign Knowing Your Exposure

We confirm the agreed changes are in the final documents before you sign.

Business owners reviewing an agreement and financial figures at a meeting table

What to Have Ready Before We Talk

Gathering these items ahead of time helps us focus on what matters most.

  • The full draft lease with every exhibit, including the guaranty form
  • The letter of intent and emails with the landlord or broker about the deal
  • The legal name of the entity signing, and who is being asked to guarantee
  • Your current lease and guarantee, if you are renewing or relocating
  • Key dates: when you need to sign and when you plan to open

Working With Your Broker and CPA

Your tenant broker negotiates the business deal: rent, term and allowances. We focus on the legal language, including the guarantee, that decides what happens if something goes wrong. We can also coordinate with your CPA on how the lease fits your budget.

Fees

We explain how the work will be priced before we start. Where possible, we offer a fixed fee for a lease review, so you know the cost up front. See our fees page for how we price legal work.

Common Questions

Answers to what business owners ask most about lease guarantees.

A personal guarantee is a separate promise by you, personally, to pay what your business owes under the lease if the business does not pay.

Often, yes. Landlords commonly ask newer or smaller businesses for one. What can be changed depends on the property, the market and your position, and we will tell you where there is room to ask.

Generally, no. A personal guarantee is your own promise, separate from the business entity, so the LLC’s liability protection generally does not apply to it.

Common requests include a cap on the amount, an end date or burn-off after a period of on-time payment, and a guarantee limited to certain obligations. Whether a landlord agrees depends on the deal.

It depends on the wording. Some guarantees continue after the lease is assigned to a buyer. This is worth planning for before you sell.

If several owners each sign, each one may be responsible for the full amount, depending on the wording.

Yes. We can explain what your guarantee covers, help with renewals and amendments, and advise on your options.

Where possible, we offer a fixed fee for a lease review. See our fees page.

Take the Legal Priorities Quiz, or send us the lease and guaranty through our contact page.

Related Guides and Services

Asked to Sign a Personal Guarantee? Start Here.

Talk to Us About Your Situation

Or call 619-895-1066. Law Office of Christopher Scott-Dixon APC, 3130 5th Ave Ste 1, San Diego, CA 92103.

This page provides general information, not legal advice. Reading it or contacting the firm does not create an attorney-client relationship.

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