Frequently Asked Questions

Surety


Whilst directors, members and the like are often hesitant to sign suretyship agreements, in the case of commercial lease agreements, ticking this box is even more important that in the case of residential lease agreements. The reason for this is that the quantum when it comes to commercial lease agreements is generally far higher than in the case of residential lease agreements, thereby exposing the Landlord to significantly more risk. Should a company be unable to pay its debts for any reason and liquidation proceedings commence, then the Landlord stands to lose a significant amount of money. Given the current economic climate, this actually tends to occur more often than one would think. Where suretyship agreements are in place, the Landlord may then immediately claim the full outstanding amount from the sureties in their individual capacity or from a founding company or franchisor in the event that a juristic entity signs as a surety. This issue is covered further in clause 47 of the Lease.


Last Updated: 2014/07/29