One of the most important things to consider when negotiating a lease for your retail business is who is going to guarantee the lease. Guarantee the lease? Yes, that is correct, in most cases, landlords are going to want to have someone personally guarantee the lease. When I represent future retail tenants, I often fight to waive the personal guarantee by my client, but it can be a “deal killer” for many landlords and it is something very important.

Landlords want to know that if something goes wrong in your business, you are not going to abandon the business in the middle of the night (this happens more than you would think). Usually, the partners of the business are required to sign a Lease Guaranty document that is a separate document from the lease document. In addition, the landlord might ask for your spouses signature on the guaranty because in many cases, assets are owned as couple and not as individuals. Make sure you and your spouse are on the same page with your new business because in most cases you are both liable.

Do not worry too much about signing a guaranty. In most cases, people have some experience signing a guaranty of sorts when they buy a home. When you obtain a mortgage on your home, you sign a personal guaranty as well.

In a future entry, I will talk about some of the things to pay attention to when you sign a guaranty.