Whether you are just starting your business or are moving to a new location, leasing suitable space is one of the most important decisions you will be making.
In addition to signing a lease, if your business is in the form of a corporation or limited liability company, you usually will be asked to sign a personal guaranty when you lease space in the name of your company. Without such a guaranty, a landlord can only look to the assets of your company to satisfy claims which may arise under the terms of your lease. A personal guaranty will allow your landlord to seek to enforce any claims arising under the terms of the lease against your personal assets.
A “Good Guy” clause in a personal guaranty of a lease will limit your personal liability in the event you surrender the leased premises to the landlord prior to the expiration of the lease term. In such a case you would only be personally liable for money due to the landlord up to the surrender date. While your company would remain liable, you would not be personally liable for any future rent due your landlord for the remainder of the lease term. Such liability could be considerable if you seek to surrender the premises early on during a long term lease.
A guaranty with a Good Guy clause will not absolve you of personal liability for any amounts due to the landlord under the lease prior to the date of your surrender of the premises and requires that you voluntarily deliver the premises to the Landlord.
Needless to say, have your attorney review your lease and any guaranty you are asked to sign in connection with leasing any commercial space as not all guaranties will contain a Good Guy clause.