How to Get Out of a Personal Guarantee on a Commercial Lease

Can you get out of a personal guarantee on a commercial lease?

Sometimes, yes, but rarely by simply revoking it. A guaranty usually says it is "absolute, unconditional and continuing," and most are drafted to survive amendments, extensions and even the tenant company's bankruptcy. Some guaranties let the guarantor revoke as to future obligations by written notice, but in a lease guaranty that clause is uncommon, and even where it exists it does not end liability for the existing term.

So the practical question is not "can I cancel it" but "which route out fits my situation." Owners who are selling the business have different leverage from owners whose business is failing, and an owner with cash has options that one without cash does not. Start by reading the guaranty itself, because the answer is often already in it.

What does your guaranty actually say?

Pull the signed guaranty, not just the lease, and answer these questions before you call the landlord:

• Is the guarantee unlimited, or capped at a dollar figure or a number of months of rent?
• Does it burn off, reducing or ending after a period of on-time payments? If so, has that date already passed?
• Is it a good guy guarantee, ending once the tenant gives notice, pays through a surrender date and hands back the space?
• Does it end on an assignment of the lease to an approved buyer, or does it say the guarantor stays liable after any transfer?
• Does it cover renewals and amendments automatically, or only the original term?
• Which state's law governs it, and does it waive defenses such as notice of default or the landlord's duty to re-let?

Route 1: use the release terms already in the guaranty

If your guaranty has a burn-off, write to the landlord asking for written confirmation that the release date has passed with no default. Do not assume a burn-off worked if you paid late even once; many burn-offs require a clean payment history.

If it is a good guy guarantee, follow the release conditions exactly: the notice period, the method of delivering notice, payment of all rent through the surrender date, vacating in the required condition and returning keys. In 1995 CAM LLC v. West Side Advisors, LLC, decided October 21, 2025, New York's Court of Appeals held that the guarantor's liability under that guaranty ended when the tenant vacated and gave up possession, without the landlord's written acceptance of surrender. The result turned on that guaranty's wording, so read yours closely and document every step with dated photos and delivery receipts.

Route 2: negotiate a release or a substitute

A landlord will release a guarantor when it gets something it values more, usually less risk or more certainty. So frame the request around the landlord's risk, not your own. A landlord that holds a guarantee from an owner whose business is shrinking may actually prefer cash in hand, or a new guarantor with a stronger balance sheet, to a personal claim that could take years to collect. Show the numbers: how long the business has paid on time, what security you can offer and what the landlord would gain. Whatever you agree, get it in a signed document that names the guaranty and states that the guarantor is released from obligations arising after a specific date. An email from a leasing agent saying "that should be fine" is not a release.

Offers that tend to work:

• A larger security deposit or an irrevocable letter of credit in exchange for releasing or capping the guarantee.
• A substitute guarantor with stronger credit, such as a buyer of the business or a new investor.
• A lease extension at current or higher rent, which gives the landlord a longer income stream in exchange for converting the guarantee to a capped or good guy form.
• A negotiated surrender of the lease with a one-time payment, signed together with a written release of the guarantor.

Which exit route fits your situation?

Does selling the business release the personal guarantee?

Not automatically. Selling your company or its assets does not end a guaranty you signed personally. Unless the guaranty or the landlord's consent to the assignment says otherwise, you can remain liable for the buyer's unpaid rent for the rest of the term, even though you no longer control the business.

The time to fix this is during the sale. Make landlord consent to the assignment a condition of closing, and make a written release of the existing guarantor part of that consent. If the landlord refuses, ask the buyer to provide its own guarantor or security, and negotiate an indemnity from the buyer backed by something real, such as a holdback from the purchase price. An indemnity alone protects you only as far as the buyer can pay.

What should you do if the landlord is already demanding payment?

A demand letter addressed to you personally usually means the landlord has decided the tenant company will not pay. Do not ignore it, and do not admit amounts you have not checked. Ask in writing for a full statement of what is claimed, broken down by rent, pass-through charges, late fees, interest and legal fees, with the dates each amount fell due. Compare it with the guaranty: a capped guarantee limits the total, a good guy guarantee may exclude rent after a surrender date, and many guaranties do not cover every charge the lease allows.

Then think about timing. The longer the space sits empty, the larger the claim grows in states where the landlord need not re-let. If the business has already closed, offering to hand back the space promptly, with keys and a clean condition, can stop the clock and give you something to trade. Many landlords will accept a lump sum below the full claim in exchange for a quick, certain resolution, especially if the space is attractive to other tenants. Get any settlement in a signed agreement that releases both the tenant company and you as guarantor, and confirm what happens to the security deposit.

What defenses does a guarantor have if the landlord sues?

If the business has stopped paying and a demand letter has arrived, defenses still exist, though modern guaranties waive many of them. A lawyer in the governing state should review these, but it helps to know the main categories:

• Material changes without your consent. Under general suretyship law, a significant change to the guaranteed obligation without the guarantor's consent can discharge the guarantor. Many guaranties waive this by consenting in advance to amendments, but some only cover changes you signed.
• Failure to mitigate. In some states the landlord must make reasonable efforts to re-let the space. Texas Property Code section 91.006 imposes that duty when a tenant abandons and voids lease clauses that try to waive it. New York's highest court took the opposite view for commercial leases in Holy Properties v. Kenneth Cole Productions (1995).
• Payments and credits. The landlord must credit the security deposit where the lease requires it, rent from any new tenant and amounts already paid.
• Procedure. Check whether notice was required and given, whether the claim includes charges the guaranty does not cover, and whether a filing deadline under state law has passed.

What happens to the guarantee in bankruptcy?

If the tenant company files for bankruptcy and rejects the lease, 11 U.S.C. section 502(b)(6) caps the landlord's claim against the company for future rent at the rent for the greater of one year or 15 percent of the remaining term, not more than three years, plus unpaid rent already due. Courts have split on whether a guarantor can use that cap, so do not count on it.

A personal bankruptcy is different. A guarantor who files may be able to discharge the guaranty debt like other unsecured debts, subject to the usual exceptions and consequences. It is a last resort with long term effects on credit and assets, and it needs advice from a bankruptcy attorney, not a guide.

How to avoid needing an exit next time

Every route above is easier if the guarantee was limited at the start. Before signing a new lease or renewal, ask for a cap measured in months of rent, a burn-off after a period of on-time payment, good guy release terms with no landlord acceptance required, and automatic release on an approved assignment. Our free limited personal guarantee template shows how those terms can be drafted.

The Commercial Lease analyzer identifies the shape of the guaranty in your lease, quotes its release conditions and flags wording that pulls future amendments and renewals into it, so you know your exposure before you sign or before you start an exit conversation. This guide is general information, not legal advice; for a guarantee covering significant rent, speak with a commercial real estate lawyer in your state.