Negotiating Commercial Leases – Part 4 – Eliminating Financial Obstacles

During the last few weeks, Marcus & Boxerman published a series of blog posts about red flag provisions in commercial leases. This installment explains how to control the state of your finances by eliminating obstacles from your next commercial lease. Check out the information below to find out how to protect your personal assets and prevent roadblocks for future secured financing to avoid problems down the line.

landlord's liens, personal guarantees, commercial leasesPersonal Guaranty. Protect your personal assets by placing a limit on personal guarantees. Personal guarantees are required by most landlords, but the scope of those guarantees is often negotiable. You can reduce your personal exposure by limiting the guarantee to a set number of years or by decreasing the extent of the guarantee by a percentage each year.

Landlord’s Liens. Put your financial interests first. Commercial leases often include a provision granting landlords a first lien in all of the personal property located on the premises. Do not agree to such a provision, because if your landlord has a lien on all of your assets, your bank cannot, thereby causing you trouble if you attempt to finance or refinance a project.

To learn more about limiting your personal obligations and preventing obstructions to future financing, contact us at (312) 216-2720 or info@marcusboxerman.com.

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