WHY PERSONAL GUARANTEES DO NOT HAVE TO DESTROY YOUR LEASE DEAL
- Renee Ervanian
- May 16
- 2 min read
When small businesses expand or take on a high-cost tenant improvement buildout, landlords often respond with a familiar request: "We'll need a personal guarantee."
For many tenants, that's the moment the deal ends. Not because the space is wrong or economics don't work, but they think a personal guarantee is risky or unfair. Personal guarantees are negotiable - just like every other clause in a commercial lease. And in Arizona, where community property laws may complicate things further, understanding your options is crucial.
WHY LANDLORDS ASK FOR PERSONAL GUARANTEES
Landlords request a personal guarantee when the tenant is a new entity, significant tenant improvements are necessary, or financials don't show stability. The guarantee is a landlord's safety net. This doesn't mean tenants must accept the first version.
ARIZONA'S COMMUNITY PROPERTY TWIST
Arizona is a community property state, which means a personal guarantee may require both spouses to sign, even if the spouse has nothing to do with the business and wants no involvement in the lease. This may be the moment where the deal falls apart, but it doesn't have to be.
NEGOTIATION STRATEGIES TO REDUCE OR REMOVE A PERSONAL GUARANTEE.
-The first question is to delete the guarantee entirely. An additional security deposit may be requested upfront for landlord acceptance, and a portion of the security deposit can always be refunded mid-term of the lease instead of at lease termination.
-Cap the dollar amount of the guarantee, or request it become void after a year or two, on a specific date.
-Replace the personal guarantee with a parent company guarantee that has stronger financials.
-Use a performance milestone, such as after 24 months of on-time rent payments, the guarantee will become VOID.
Tenants have options. Landlords have flexibility. You should not have to walk away from the space you want due to a personal guarantee.
About the Author
Renee Ervanian is the Managing Broker of Core Commercial, LLC, specializing in Metro Phoenix tenant and buyer representation, owner-user sales, acquisitions, and family legacy portfolios. With 20 + years of experience advising office, industrial, and flex users across the Valley, she is known for her deep submarket expertise, negotiation strategy, and tenant-side advocacy. Renee publishes a daily Phoenix tenant-representation micro-analysis to help businesses avoid costly lease mistakes and negotiate from a position of strength.
Credibility and Compliance
Core Commercial LLC is an independent Phoenix commercial real estate brokerage focused solely on representing tenants, buyers, owner-user buildings, and family legacy portfolios. Insights reflect Phoenix market conditions and lease structures. For direct tenant, buyer representation support, contact:
Renee Ervanian
Managing Broker, Core Commercial LLC
Phoenix Metro Office & Industrial Representation
602 - 330 - 7482
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