The downturn in the economy, has seen a dramatic increase in
clients coming to us for advice on their rights and obligations
under commercial leases and brought a renewed focus on lease
guarantees. This article explores the practical benefit and effect
of lease guarantees and the main commercial and legal
considerations which apply both to their negotiation and their
enforcement.
Purpose of Lease Guarantee
A landlord's primary commercial consideration in granting a
lease is whether the tenant has the means necessary to pay the rent
and perform its obligations for the duration of the tenancy. Of
course it's simply not possible for either party to predict
this with any certainty into the future and so in entering into a
lease both parties do take on the risk of non-performance. This
risk is inherent in the landlord and tenant relationship as it is
in all contracts. But there is a level of risk beyond which it is
institutionally recognised that landlords should not
