A release of personal guarantee form is a formal agreement that frees the guarantor from their obligations under the contract. The release must be documented properly to ensure it is legally binding, and notarization, while not mandatory, is recommended.
Supplemental Forms
Personal Guarantee for a Lease Agreement (Co-Signer) – Used when a third party (guarantor) is needed to ensure the lease obligations are met if the tenant defaults.
When Is a Personal Guarantee Released?
There are several instances where a personal guarantee may be released:
- Upon Lease Completion: Once the lease terms have been fulfilled and the tenant has met all financial obligations.
- Transfer of Lease: If the lease is transferred to a new tenant or guarantor, the original guarantor may be released.
- Voluntary Release by Landlord: In some cases, the landlord may agree to release the guarantor early, especially if the tenant has demonstrated financial stability or provided alternative security.
- Other Situations: The guarantor may be released if the tenant enters bankruptcy, the lease is renegotiated, or if the guarantor leaves a business (in the case of commercial leases).
Legal Considerations for Releasing a Personal Guarantee
Before a personal guarantee can be released, it is essential to understand the legal obligations involved. Guarantors should:
- Review the Lease Agreement: Ensure that the release conditions are clearly outlined in the original agreement.
- Request Written Confirmation: The release should be in writing and signed by all parties involved to ensure it is legally binding.
- Consult Legal Counsel: Seeking advice from an attorney is crucial to avoid unintended consequences or liabilities.
Differences Between Residential and Commercial Lease Personal Guarantee Releases
In residential leases, personal guarantees are typically easier to release, especially once the lease term ends or the tenant has proven their financial stability.
In commercial leases, personal guarantees often remain in place for extended periods, making it more difficult to secure a release.
How to Write a Release of Personal Guarantee
Below is a detailed, step-by-step guide that outlines how to properly draft and execute a release of personal guarantee:
Step 1 – Start with the Basic Information
The introduction of the document should clearly identify the parties involved and the key information:
- Document Date: Record the exact date the release of personal guarantee is being drafted. This should include the day, month, and year.
- Guarantor’s Information: Enter the full legal name of the guarantor who is being released from their obligations. This includes providing their full street address, city, and state. For clarity, make sure to use their complete legal name as it appears in the original lease agreement.
- Releasor’s Information: The releasor is the party who holds the authority to release the guarantor from their obligations, usually the landlord or creditor. Similarly, provide the full name, street address, city, and state for the releasor.
Step 2 – Reference the Original Agreement
This section is critical for linking the release to the original lease agreement or contract:
- Document Title: Specify the title of the original lease or agreement that the guarantor is being released from. If the document has a formal title, such as “Commercial Lease Agreement,” enter it here to ensure there’s no ambiguity.
- Execution Date: Record the exact date when the original agreement was signed. This should be consistent with the date on the original lease to avoid any confusion.
- State Governing the Agreement: Identify the state whose laws govern the original lease and the release agreement. This is important as different states may have varying regulations around personal guarantees.
Step 3 – Specify the Terms of Release
In this section, clarify the scope of the release and confirm that the guarantor is no longer liable for any future obligations or debts related to the original lease agreement:
- Clear Language: Use straightforward, unambiguous language to state that the guarantor is fully released from their financial responsibilities and obligations under the original agreement. You may also want to outline whether this release applies retroactively to any existing claims.
- Conditions for Release: If there are any specific conditions for releasing the guarantor (e.g., fulfillment of all lease terms by the tenant or provision of a replacement guarantor), make sure to outline them here.
Step 4 – Add Signatures and Notarize
This is a formal document that requires signatures from both parties as well as a notary for validation:
- Guarantor’s Signature: Leave space for the guarantor to sign, along with the date of signing. This signature confirms the guarantor’s acknowledgment of the release.
- Releasor’s Signature: Similarly, provide space for the Releasor to sign and date the document. This confirms their agreement to release the guarantor from their obligations.
- Notarization: A notary acknowledgment is typically required to make the release legally binding. The document should include space for the notary’s signature, stamp, and other relevant details. Both the guarantor and releasor may need to appear before the notary at the time of signing.
Step 5 – Include an Optional Recital of the Release
For additional clarity, you can include a recital clause that summarizes the intention of the release. This optional section can read something like this:
“This Release is executed to formally remove the guarantor from any and all obligations related to the original lease agreement, effective immediately upon signing.”
Step 6 – Make Copies for All Parties
Once the release is signed and notarized, ensure that copies are made for all relevant parties. The guarantor, releasor, and any third-party entities involved (such as attorneys or property managers) should all retain a copy for their records.
Release of Personal Guarantee Sample
You can download a release of personal guarantee template below in PDF or Word format.
