A Minnesota Personal Guaranty, also known as a Guarantee of Contract for the Lease and Purchase of Real Estate, is a legal document used in real estate transactions to provide additional security for a lease or purchase agreement. This agreement involves a third party, referred to as the guarantor, who guarantees the performance of the contract by assuming responsibility for any financial obligations or defaults on the part of the lessee or purchaser. In Minnesota, there are two primary types of Personal Guaranty that are commonly used for real estate transactions: 1. Lease Personal Guaranty: This type of guaranty is used when entering into a lease agreement for commercial or residential property. The guarantor agrees to be responsible for fulfilling the terms of the lease, including payment of rent, maintenance costs, and any other obligations specified in the lease agreement. In the event of default by the lessee, the landlord can seek remedies from both the lessee and the guarantor. 2. Purchase Personal Guaranty: This form of guaranty is typically used in real estate purchase agreements, where the buyer requires additional assurance to secure financing or demonstrate financial stability. The guarantor provides a personal guarantee that they will fulfill any financial obligations related to the purchase, such as payment of the purchase price, taxes, and other associated costs. In case the buyer fails to fulfill these obligations, the seller can pursue remedies against both the buyer and the guarantor. The Minnesota Personal Guaranty includes several important elements to ensure its effectiveness and enforceability. These elements typically include: 1. Identification: The guarantor's full legal name, contact details, and address are specified to establish their liability in the agreement. 2. Agreement Scope: The guaranty clearly defines the scope of the guarantee, outlining the specific lease or purchase agreement being guaranteed. It should reference the key terms and conditions of the underlying contract to ensure clarity and specificity. 3. Indemnification: The guarantor indemnifies the landlord or seller against any losses, damages, or expenses incurred as a result of the lessee's or purchaser's default. This provision protects the guarantor from any claims arising from their guarantee. 4. Joint and Several liabilities: It is essential to stipulate that the guarantor's obligations under the personal guaranty are separate from those of the lessee or purchaser. This allows the landlord or seller to pursue remedies against either party independently or jointly, providing additional security. 5. Governing Law: In Minnesota, the personal guaranty should indicate that it is governed by the laws of the state to ensure compliance with local regulations and statutes. It is crucial for all parties involved in a real estate transaction in Minnesota, including landlords, lessees, sellers, purchasers, and guarantors, to understand the implications and obligations outlined in a Personal Guaranty. Seeking legal advice or assistance from a qualified attorney experienced in real estate matters is highly recommended ensuring the validity and enforceability of such agreements.
Minnesota Personal Guaranty - Guarantee of Contract for the Lease and Purchase of Real Estate
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A personal guaranty is not enforceable without consideration A contract is an enforceable promise. The enforceability of a contract comes from one party's giving of consideration to the other party. Here, the bank gives a loan (the consideration) in exchange for the guarantor's promise to repay it.
A personal guarantee can be enforced the same way as any debt. If the business owner does not pay, the creditor can bring a lawsuit to receive a judgment and levy the owner's personal assets to cover the debt. The exact terms of a personal guarantee specify a creditor's options under the guarantee.
By agreeing to a personal guarantee, the business borrower is agreeing to be 100 percent personally responsible for repayment of the entire loan amount, in addition to any collection, legal, or other costs related to the loan.
Providing a personal guarantee means that if the business becomes unable to repay the debt, the individual assumes personal responsibility for the balance. Personal guarantees provide an extra level of protection to credit issuers who want to make sure they will be repaid.
A business owner will often sign a personal guarantee if a company needs to make a purchase on credit for things such as real estate, inventory, supplies, or services. By signing the agreement, the owner commits to paying the debt with personal (nonbusiness) funds if the company can't satisfy the obligation.
An otherwise valid and enforceable personal guarantee can be revoked later in several different ways. A guaranty, much like any other contract, can be revoked later if both the guarantor and the lender agree in writing. Some debts owed by personal guarantors can also be discharged in bankruptcy.
If you sign a personal guarantee, you are personally liable for the loan balance or a portion thereof. If your business later defaults on the loan, anyone who signed the personal guarantee can be held responsible for the remaining balance, even after the lender forecloses on the loan collateral.
The term personal guarantee refers to an individual's legal promise to repay credit issued to a business for which they serve as an executive or partner. Providing a personal guarantee means that if the business becomes unable to repay the debt, the individual assumes personal responsibility for the balance.
In writing The guarantee must be evidenced in writing to be enforceable. Signed The document must be signed by the guarantor or their authorised agent. Their name can be written or printed. Secondary liability The document must establish that the guarantor has secondary liability for the debt.