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  • Writer's pictureRaphael Collazo

What is a Personal Guaranty in Real Estate?

A personal guaranty in real estate is a legal agreement in which an individual personally guarantees the payment of a debt or obligation related to a property. In other words, the individual is agreeing to be personally responsible for paying back the debt or fulfilling the obligation if the borrower is unable to do so.

Personal guarantees are often required in real estate transactions as a way to reduce risk for lenders or other parties involved in the transaction. For example, a lender may require a personal guaranty from the borrower of a commercial property as an additional form of security in case the property is not generating enough income to cover the loan payments.

Personal guarantees can also be required in other types of real estate transactions, such as lease agreements or contracts for the sale of a property. In these cases, the individual making the guaranty may be the landlord or seller of the property, rather than the borrower. It's important to carefully consider the terms and implications of a personal guaranty before agreeing to one, as it can have significant financial consequences if the borrower is unable to fulfill the obligation.

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