Our highly regarded commercial property team can assist with security documentation, including rent deposit deeds; authorised guarantee agreements; personal and corporate guarantees.
Rent Deposit Deeds
A rent deposit deed is used when a landlord takes a deposit amount to cover any costs that a tenant may accumulate. The purpose of the rent deposit deed is to make sure that the money remains the property of the tenant until it is needed by the landlord to cover any costs.
Authorised Guarantee Agreements
An authorised guarantee agreement places an obligation on a tenant to guarantee the performance of the covenants contained in the lease by the new tenant. The covenant usually includes payments of rent and repairs. These can be complex documents and vary between lease agreements.
Personal and Corporate Guarantees
A personal guarantee is a document that requires an individual, usually a partner or director, to vow that they will repay credit provided to the business. This means the guarantor becomes personally liable to make the payment if the business is unable to. They can be a useful tool offering protection in the event a business fails to pay its debt but does carry the risk of impacting the guarantor’s personal life.
It is highly advised to seek independent legal advice before agreeing to be a guarantor or signing any agreements relating to security documentation. It is important to fully understand the implications and terms which often include:
- The guarantee may be liable for more than just the initial loan
- If any personal assets are subject to a charge by an existing lender. This will require a separate Deed of Priority which sets out which lender gets what first
- There is often a term that means the lender can “call in” their loan on demand and if the company is unable to pay, they may look to the guarantor as the means of repayment
- If the loan is repaid early, costs and interest may be due which were not accounted for.
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