The Parent Guarantee Lease Agreement is commonly used in German commercial real estate transactions where a landlord requires additional security beyond the tenant's own covenant. This document is particularly relevant when the tenant is a subsidiary or special purpose vehicle with limited financial resources, and the landlord seeks the financial backing of a stronger parent company. The agreement must comply with German legal requirements for both lease agreements (§§ 535-548 BGB) and guarantees (§§ 765-778 BGB). It typically includes detailed provisions on the scope of guaranteed obligations, enforcement mechanisms, and the duration of the guarantee. The document is essential for risk mitigation in high-value commercial leases and is often required by institutional landlords or in significant property developments.
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1. Parties: Identification of all parties: Landlord, Tenant, and Guarantor (Parent Company), including full legal names, registration details, and addresses
2. Background: Context of the agreement, reference to the main lease agreement, and the relationship between the Tenant and Guarantor
3. Definitions: Key terms used throughout the agreement, including 'Guaranteed Obligations', 'Lease Agreement', 'Property', and 'Guarantee Period'
4. Guarantee Obligations: Core section defining the scope of the guarantee, including all obligations covered and the nature of the guarantee (e.g., direct, unconditional, irrevocable)
5. Duration of Guarantee: Term of the guarantee, including start date and end conditions
6. Enforcement and Claims Process: Procedures for making claims under the guarantee, including notice requirements and payment terms
7. Guarantor's Undertakings: Specific promises and obligations of the guarantor, including maintaining financial capacity
8. Representations and Warranties: Statements about the guarantor's capacity, authority, and financial condition
9. Preservation of Rights: Landlord's rights preservation and the continuing nature of the guarantee
10. Notices: Communication procedures and contact details for all parties
11. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes
12. Execution: Signature blocks and execution requirements complying with German law
1. Guarantee Limitations: Specific limitations on the guarantee amount or scope, used when the guarantor requires caps or restrictions
2. Financial Covenants: Requirements for the guarantor to maintain certain financial metrics, used for longer-term or high-value leases
3. Multiple Properties: Additional provisions for cases where the guarantee covers multiple properties or lease agreements
4. Change of Control: Provisions dealing with changes in ownership or control of the guarantor or tenant
5. Assignment and Transfer: Provisions regarding the transfer of guarantee rights or obligations, if permitted
6. Parent Company Specific Provisions: Special provisions related to the parent company's jurisdiction if different from Germany
1. Schedule 1 - Lease Agreement: Copy or key terms of the underlying lease agreement
2. Schedule 2 - Property Details: Description and details of the leased property or properties
3. Schedule 3 - Guaranteed Obligations: Detailed list of all obligations covered by the guarantee
4. Schedule 4 - Corporate Authority Documents: Relevant corporate approvals and authority documentation for the guarantor
5. Schedule 5 - Form of Demand: Template for making claims under the guarantee
6. Appendix A - Financial Reporting Requirements: Details of any financial information the guarantor must provide periodically
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