I'm opening a boutique and my landlady's asking for 6 months rent deposit, 3 months rent upfront, signatures from my parents company (which I'm trading through) and a personal guarantee as well. Is she asking too much, or is this perfectly normal in the retail industry?
2006-09-25 06:28:44 · 8 answers · asked by Danielle M 1 in Business & Finance ➔ Small Business
This is not a legal or right or wrong issue. It is about taking business risk. Your landlady obviously thinks that your business is a poor risk. Personal guarantee does not really help that much if your parents' company is judgment proof. Besides, collection will take a court case and that take time and money.
It is common knowledge that small business turns over often and the landlord get entangles in a mess of legal processes. Most landlords ask for personal guarantees especially with new business. This way it makes the tenant think twice before they think about defaulting on the lease.
If your business takes off and do well, may be you can renegotiate the lease when you are ready for extension to either reduce the security deposit or remove the personal guarantee.
2006-09-25 06:49:05 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Did you get her PRSI number or social number? 3 months rents is average (that includes deposit) but 6 mths way to much, guarantee signature from other company ok but personal guarantees is way to much. Just opened office i think its to much
Best of luck in new business
2006-09-25 13:50:08 · answer #2 · answered by Anonymous · 0⤊ 0⤋
I agree with "me" and "frog" the personal guarantee thing could come back and bite you in small claims court if you dont generate enough revenue to keep up on the lease. The lessor is asking a bit much to require all that. Shop around for another property this one seems a little much, dont rush yourself.
2006-09-25 13:50:27 · answer #3 · answered by metalsoft@sbcglobal.net 2 · 0⤊ 0⤋
3 month deposit plus 3 month up front rent is fairly normal.
Signatures from your parents, as they are effectively renting the premises, would cover.
Even if they are only acting as guarantors, that should be enough.
Asking you for a personal guarantee as well serves no purpose to the landlord but could affect you in the future.
I wouldn't
2006-09-25 13:43:00 · answer #4 · answered by Froggy 7 · 1⤊ 0⤋
Idk...a personal guarantee is a little much. Check with the city of commerce and maybe they can advise what is the norm for where u are.
2006-09-25 13:37:53 · answer #5 · answered by Me 3 · 0⤊ 0⤋
I don't blame her. With new businesses in the first two years, credit is very difficult. The business failure rate is very high. If you have a choice of properties ?
2006-09-25 13:41:57 · answer #6 · answered by Perseus 3 · 0⤊ 1⤋
even limited company directors get asked to sign personal guarentees and the term limited is supposed to limit their liability.
2006-09-26 08:30:22 · answer #7 · answered by alatoruk 5 · 0⤊ 0⤋
depends on your age. but that does sound a bit harsh. get a solicitors opinion.
2006-09-25 13:38:00 · answer #8 · answered by grumpcookie 6 · 0⤊ 0⤋