A personal guarantee on a commercial lease means that if your business stops paying rent, the landlord can come after you personally. Not the LLC. Not the corporation. You — your savings, your home equity, your other assets. Most tenants understand this in the abstract before they sign. What they often don't understand is the scope: how many months of rent, whether the guarantee covers the full lease term, what happens if you sell the business, and whether the guarantee survives in bankruptcy. This is one of the most negotiable provisions in a commercial lease, and most tenants sign whatever the landlord presents without pushing back.

Why Landlords Require Personal Guarantees

A new LLC with no track record offers a landlord little comfort. If your business has been operating for less than two years, has no significant assets, or is a single-location startup, the landlord is taking a real credit risk. They're locking up a space for three, five, or ten years. The personal guarantee is how they manage that exposure. This is a legitimate concern, and understanding that framing matters — it helps you negotiate the scope rather than fighting the guarantee entirely.

What Makes Personal Guarantees Negotiable

Burn-Down Provisions. A full-term guarantee exposes you to the entire remaining lease obligation from day one. A burn-down provision reduces the guaranteed amount over time — for example, the guarantee covers 12 months of rent after year one, and six months after year three. This rewards good payment history and limits exposure as you build a track record with that landlord.

Capped Guarantees. Some guarantees can be capped at a dollar amount rather than the full lease obligation. If the space costs $8,000 per month and the lease is ten years, you're potentially guaranteeing $960,000 in liability under a full-term guarantee. A capped guarantee — say, equal to six months' rent — limits exposure to $48,000.

Good Guy Clauses. A "good guy" clause allows you to terminate your personal guarantee liability by surrendering the premises with advance notice — typically 90 to 180 days. If the business closes and you give proper notice and leave the space in good condition, your guarantee liability stops at the surrender date. This doesn't help if the business simply defaults without notice, but it provides a controlled exit path.

Release Upon Approved Sale. If you sell your business and the buyer assumes the lease, does your personal guarantee survive? Without an explicit release provision, in many cases it does — you remain on the hook even after you've sold. You can negotiate a provision that releases you when a qualified buyer assumes the lease and the landlord approves the assignment.

What Louisiana Tenants Should Know Specifically

Louisiana commercial landlords have a remedy under the Civil Code called the lessor's privilege — a lien on personal property located on the leased premises. This is separate from the personal guarantee and runs concurrently. It means a defaulting tenant faces both a personal guarantee claim and a potential lien on business equipment and inventory sitting in the space.

Louisiana commercial eviction law also moves more quickly than many tenants expect. From a documented default, a landlord can pursue eviction through summary proceedings in the district court. If you're facing a lease dispute, get legal help immediately — the timeline compresses fast.

Frequently Asked Questions

Can I ever get a commercial lease without a personal guarantee in Louisiana?

Yes, in some cases. Established businesses with audited financials, strong credit, and a meaningful operating history can sometimes negotiate a lease without a personal guarantee, or substitute a letter of credit or larger security deposit instead. These terms are established before signing.

Does a personal guarantee survive bankruptcy?

It can. Personal guarantees are often not dischargeable in a business bankruptcy, and a landlord can continue to pursue the guarantor personally even if the business entity's obligations are discharged. This is one reason the scope and cap of the guarantee matters so much at the time of signing.

What is a "joint and several" personal guarantee?

If multiple business owners co-sign a personal guarantee jointly and severally, the landlord can pursue any one of them for the full amount — not just their proportionate share. If you're co-guaranteeing with a business partner, you could be liable for the entire obligation if they can't or won't pay.

When should I get an attorney to review a commercial lease?

Before you sign it. Lease review and negotiation costs far less than dealing with a provision mid-term that you didn't understand when you executed it. The personal guarantee is one of several provisions — alongside rent escalations, CAM caps, and exclusivity — that deserve a hard look before execution.

If you're reviewing a commercial lease in Louisiana, BLG can help you understand what you're agreeing to and where there's room to negotiate. Schedule a consultation before you sign.

This post is intended for general informational purposes and does not constitute legal advice. Consult a licensed attorney in your jurisdiction regarding your specific situation.