Commercial Lease l Should I enter into a personal guarantee under a Jersey lease?
As a Company Director am I obliged to give a personal guarantee?
It has become accepted practice in Jersey for Lessors to seek a personal guarantee from corporate tenants when entering into a commercial lease. While there is no lawful requirement for personal guarantees to be provided, the reality is that the provision of a lease without a personal guarantee is unlikely to be agreed.
Will I be released from my personal guarantee if I assign the lease to a new lessee?
Unless the Jersey lease specifically provides, there is no obligation on a lessor to release a guarantor. When negotiating the terms of a lease, particularly a long lease, it is important to consider this (amongst other issues) and make sure you agree with the lessor to include a clause to release the personal guarantor on assignment.
Will I remain liable under a personal guarantee if the lease term is extended?
In general terms you cannot be bound by or liable under a Jersey lease unless you have executed it. If the term of the lease is extended and you as a guarantor had not agreed to do, then its liability may not extend to the renewed term of the lease. However this is a general statement and you should always take legal advice on this point are there are exceptions to this general statement.
Can the Lessor choose whom to take action or does the Lessor have to action all the parties under the lease?
The Lessor under a standard Jersey guarantee will be entitled to choose whom to action. It will come of no great surprise that the Lessor is likely to assess whom, out of the lessor and or guarantor, has the stronger asset position and take action accordingly. Moreover if the Lessor actions, for example the guarantor, and finds there is a shortfall, the Lessor will thereafter be entitled to pursue the Lessee for the balance.
Great caution should always be taken when providing a personal guarantee under a lease (or otherwise). If is not a document you should sign without legal advice.