A Lease Guarantee (also called a lease guaranty or surety agreement) is a contract in which a third party, the guarantor, agrees to assume the tenant's obligations under a lease if the tenant defaults. The guaranty creates a secondary obligation: the landlord's primary recourse is against the tenant, but the guarantor becomes liable when the tenant fails to perform. Under the Restatement (Third) of Suretyship and Guaranty Section 1, a guaranty is a promise to answer for the debt, default, or obligation of another person.

The Statute of Frauds requires all guaranty agreements to be in writing and signed by the guarantor. Under UCC Section 2-201 and its common law equivalent, an oral promise to pay another's debt is unenforceable. This writing requirement applies regardless of the amount involved and cannot be satisfied by email exchanges or text messages in most jurisdictions, though some states have adopted electronic signature statutes that may validate digital execution.

Lease guaranties may be structured as absolute or conditional. An absolute guaranty (also called an unconditional guaranty) allows the landlord to proceed directly against the guarantor upon the tenant's default without first pursuing the tenant or exhausting other remedies. A conditional guaranty requires the landlord to take specific actions, such as obtaining a judgment against the tenant, before demanding payment from the guarantor. The distinction significantly affects the landlord's enforcement timeline and the guarantor's risk exposure.

Landlords require lease guaranties when the prospective tenant has insufficient credit history, limited operating history for a new business, or inadequate financial resources to demonstrate ability to pay rent throughout the lease term. Commercial landlords routinely require personal guaranties from the principals of newly formed LLCs or corporations, because the entity itself has no credit history or substantial assets.

Parents guaranteeing their adult child's first apartment lease is one of the most common residential guaranty scenarios. The guaranty assures the landlord that rent will be paid if the young tenant encounters financial difficulties, and it may be the deciding factor in the landlord's approval of the application.

Commercial tenants whose corporate entity has limited net worth or is a single-purpose entity formed specifically to hold the lease need a guarantor, typically the business owner or parent company, to provide the landlord with a creditworthy party to pursue in the event of default. In multi-unit franchise operations, the franchisor may require the franchisee to provide a personal guaranty on the unit lease.

Subtenants in sublease arrangements may need a guarantor when the subtenant's creditworthiness does not meet the prime landlord's standards. The guaranty supplements the primary tenant's continuing obligation under the master lease and provides the landlord with an additional source of recovery.

The scope of the guaranty must define exactly which tenant obligations the guarantor assumes. A full guaranty covers all monetary and non-monetary obligations including rent, additional rent (operating expenses, taxes, insurance pass-throughs), damages for breach, holdover rent, and the landlord's costs of enforcement including attorneys' fees. A limited guaranty may cap the guarantor's exposure at a specific dollar amount or limit coverage to rent obligations only.

The duration provision specifies whether the guaranty covers the entire lease term including renewals and extensions, or terminates at a specific date or event. A continuing guaranty remains in effect until the tenant's obligations are fully satisfied, while a limited-term guaranty expires regardless of outstanding obligations. If the lease is amended to increase rent or extend the term, the guaranty should address whether the guarantor's consent is required for the expanded obligation.

Waiver provisions are critical to enforceability. The guarantor should waive the defenses of diligence (requiring the landlord to pursue the tenant first), notice of default (requiring the landlord to notify the guarantor of each tenant breach), and marshaling of assets (requiring the landlord to exhaust tenant assets before claiming against the guarantor). Under the Restatement (Third) of Suretyship Section 48, these waivers must be explicit.

Notice requirements should specify whether the landlord must notify the guarantor of tenant defaults, lease modifications, or the exercise of remedies. Even with broad waiver language, many courts require the landlord to provide the guarantor with notice of the tenant's default before commencing action against the guarantor.

The guarantor's right to cure the tenant's default should be addressed, including the cure period, the manner of cure, and whether the guarantor may step into the tenant's position (subrogation) after satisfying the landlord's claim. The guaranty should also state the guarantor's obligation to pay the landlord's costs of enforcement, including court costs and reasonable attorneys' fees.