Question 1

What is the difference between a guaranty of payment and a guaranty of collection?

Accepted Answer

Payment vs. collection: guaranty of payment: the creditor can proceed directly against the guarantor without first pursuing the principal debtor (the most common type in commercial leases), the guarantor is essentially a co-obligor (liable immediately upon default). Guaranty of collection: the creditor must first exhaust remedies against the principal debtor (sue the tenant, obtain a judgment, and attempt collection) before pursuing the guarantor. Tenants should negotiate: a guaranty of collection (requiring the landlord to pursue the tenant entity first), or at minimum: require the landlord to provide notice of default and an opportunity to cure before pursuing the guarantor.

Question 2

How does a Florida court enforce a commercial lease guaranty?

Accepted Answer

Enforcement: the landlord files a lawsuit against the guarantor (either separately or together with the tenant), the landlord must prove: the existence of the guaranty (written agreement signed by the guarantor), the tenant’s default (failure to pay rent, breach of lease terms), the amount owed (supported by the lease terms and accounting), and demand (that the landlord demanded payment from the guarantor). The court can award: the amount owed under the guaranty, attorney fees and costs (if provided in the guaranty), and prejudgment interest (at the statutory rate). The landlord can then enforce the judgment against the guarantor’s personal assets.

Question 3

What are the guarantor’s rights in a Florida commercial lease default?

Accepted Answer

Guarantor rights: notice of default (the guarantor should be entitled to notice when the tenant defaults), right to cure (the guarantor should have the right to cure the default before the landlord accelerates or terminates), subrogation (after paying the landlord, the guarantor can seek reimbursement from the tenant), contribution (if there are multiple guarantors, each can seek contribution from the others), and mitigation (the landlord has a duty to mitigate damages: in Florida, Section 83.595 requires the landlord to make reasonable efforts to re-let the premises after the tenant vacates).

Personal Guaranty in Commercial Lease

Commercial Lease Guaranty in Florida

Payment vs. Collection

Enforcement

Guarantor Rights

Related Terms

Barnes Walker Commercial Real Estate

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