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  1. #1

    Default New Lease -3 month's rent as guarantee vs bank bond in lieu of personal guarantee

    hi,
    We are re - leasing a small 84m2 office in N Shore. Rental approx 22K +GST
    The departing tenant who were a start up business gave us a 3 month's equiv of gross rental guarantee - approx 5K as security as they were a new business and relatively new to the country. A personal guarantee would have been risky. This has worked well and we will be returning it to them in full as they leave. Obviously this was all written into the additional terms of the lease agreement.

    Ideally we would like the same arrangement with any new tenant that signs up . The agent is suggesting a " bank bond" is another alternative to sum of money transferring into our account.
    Does anyone have any experience taking a bank bond as a guarantee or have any other advice to other that gives some security when dealing with small, often new, businesses as tenants?

    Thanks

  2. #2
    Join Date
    Dec 2010
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    Quote Originally Posted by fewtrell View Post
    hi,
    We are re - leasing a small 84m2 office in N Shore. Rental approx 22K +GST
    The departing tenant who were a start up business gave us a 3 month's equiv of gross rental guarantee - approx 5K as security as they were a new business and relatively new to the country. A personal guarantee would have been risky. This has worked well and we will be returning it to them in full as they leave. Obviously this was all written into the additional terms of the lease agreement.

    Ideally we would like the same arrangement with any new tenant that signs up . The agent is suggesting a " bank bond" is another alternative to sum of money transferring into our account.
    Does anyone have any experience taking a bank bond as a guarantee or have any other advice to other that gives some security when dealing with small, often new, businesses as tenants?

    Thanks
    Only that 3 months is not enough. If you think about it, if there is trouble you'll be probably 2-3 months down before you finally get them out, and then you'll be paying 2 months worth of rent to an agent in leasing commission plus likely offering some sort of rent break to the new tenant. I'd recommend 6 months minimum.

    Nothing beats having money in the bank. If you can't get that, then a bank bond is ok, but do be careful to read the bank terms and conditions.


 

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