A personal guarantee (PG) is a promise by an individual (often a director/owner) to meet the company’s obligations if the company can’t. Landlords and lenders use PGs to reduce risk. Because your personal assets may be on the line, take independent legal advice before signing.
Property leases (rent, dilapidations, costs)
Asset finance and leasing
Business loans/overdrafts
Invoice finance and trade credit
No — but without a PG, the landlord/lender may refuse terms or seek alternatives (bigger deposit, parent/company guarantee, letter of credit).
Cap & scope: Set a monetary cap and specify what’s covered (rent only? service charge? costs/interest?).
Duration: Limit time (e.g., to the initial lease term) and add sunset/step-down provisions.
Release triggers: Automatic release on assignment, lease expiry, or after X on-time payments.
Mitigation & notices: Require landlord to mitigate loss and to notify on arrears/default.
Security order: Clarify priority vs. deposits/other security; avoid “all monies” wording if not intended.
Joint & several: If multiple guarantors, try to apportion liability or add contribution clauses.
Confession/indemnity wording: Beware clauses turning the PG into a broader indemnity (usually harsher).
Your home, savings and investments may be exposed (even if owned jointly, depending on structure).
Some PGs allow immediate demand on default without first enforcing against the company.
Check for events of default (insolvency, late rent, covenant breaches) and any cross-default with other facilities.
They’re generally enforceable if properly drafted/executed. Limitation periods for claims are typically:
6 years from breach for simple contracts;
12 years for deeds.
Contracts can set different time limits, and acknowledgements/part-payments may restart the clock.
Agree clear release mechanics now (on lease assignment, renewal, or after a track record of compliance).
If you resign as director or sell shares, you’re not automatically released — obtain a formal deed of release.
Avoid triggering an immediate demand: plan any restructure/exit with your solicitor.
Higher rent deposit or escrow
Company/parent guarantee instead of personal
Letter of credit or bank bond
Guarantee limited to a fraction of rent (e.g., 6–12 months)
We review, negotiate and document PGs and lease security packages so you understand exact liability, negotiation levers, and exit routes.
Get advice before you sign: use the contact form on this page, email info@ansons.law, or tell us about your timeline and heads of terms.
Disclaimer: The contents of this article are for general information only and do not constitute legal advice. The law and HMRC guidance may have changed since publication. Always seek professional advice before taking action.