Commercial Real Estate

Understanding Your Commercial Lease: Security Deposit, Letter of Credit, and Personal Guarantee

When negotiating a commercial lease, you will almost always encounter one or more lease clauses (and many times entire lease exhibits) that deal with what landlords often call “credit enhancement.” The major types of credit enhancement found in a commercial lease are security deposits, letters of credit, and personal guarantees. Often you may deal with more than one type in a single commercial lease. These provisions are designed to give the landlord more certainty that the tenant will be able to meet its obligations under the lease. And security deposits, letters of credit, and personal guarantees are particularly important to the landlord when the landlord is extending some type of credit, such as a tenant improvement allowance. They are also...

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How to Position Yourself to Win a Contract Dispute

Yesterday the Washington Court of Appeals released an opinion providing a good example of how you can position yourself to win a contract dispute. The opinion affirmed a summary judgment awarding more than $300,000 plus fees and interest to GLV International, Inc. against American Rodsmiths, Inc. and its president Robert Scherer.

The Facts of the Case American Rodsmiths purchased more than $300,000 in goods from GLV. American Rodsmiths then failed to pay its outstanding balance. GLV extended credit to American Rodsmiths based on a personal guaranty from the company president, Mr. Scherer. The personal guaranty included a provision awarding attorney fees to GLV if it prevailed in a suit against Mr. Scherer to enforce the terms of the personal guaranty. GLV offered...

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