Lease guarantee (guarantor of the lease)

Éducaloi, a Quebec legal-information service, explains that when a company signs a commercial lease it is the tenant, but the landlord may ask a representative of the company to be personally liable too. The landlord can then sue that person if the company does not fulfil its obligations, for example by not paying rent. A seller who signed one, or a buyer asked to, meets it at assignment.

Quebec’s rules

The Civil Code of Québec defines suretyship as a contract by which the surety binds himself to the creditor to perform the debtor’s obligation if the debtor fails, and says it is not presumed but exists only if express (arts. 2333, 2335). Assigning a lease discharges the former lessee, unless, where the lease is not of a dwelling, the parties agree otherwise (art. 1873). Security given by a third person does not extend to a renewed lease (art. 1881). Other provinces apply their own law and the guarantee’s wording.

What to ask

• Who signed a guarantee, and what the document says about assignment and renewal
• Whether the landlord will release the seller, or require the buyer to give a new guarantee
• Whether the release is in writing

See whether a landlord can refuse to release you after the buyer takes over the lease and personal guarantee.