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Personal guarantees in lieu of a security deposit

When leasing new space, the requirement to put up a security deposit can be a big drain on cash flow at a time when moving and setup costs are already creating pressure.  Obviously the best alternative is to negotiate a reduction, but this is not always a successful ploy and another alternative to consider is to offer a limited personal guarantee equal to the value of the security deposit that you are unwilling or unable to put up.

People are rightly cautious about giving personal guarantees, and there are a few caveats to consider before taking this potentially dangerous course of action.  First and foremost, you need to make absolutely certain that if you do put up a personal guarantee it is limited absolutely to the amount of the security deposit that you are substituting it for.  Look carefully for any language that attempts to link the security deposit to any stream of future payments under the lease. 

The next thing to look to accomplish is to have the guarantee go away over a period of time.  This is actually a major advantage of the guarantee over the security deposit, because as the landlord becomes comfortable with your payment record and your standing as a tenant, he will be more likely to agree to release the guarantee then he would be to return cash from a security deposit where you have put up real money. 

The ideal would be that if you put up a personal guarantee for 1 month of the security deposit on a 5 year lease, that that amount should reduce by 20% a year so that at the end of the lease your guarantee is expunged and you effectively have no skin in the game for the security deposit on that piece.