Lease Guaranty Agreement Template for Philippines

The Lease Guaranty Agreement is a crucial document in Philippine real estate transactions where additional security is required for lease arrangements. It is commonly used when a landlord requires extra assurance beyond the tenant's own covenant, such as when dealing with new businesses, foreign companies, or tenants with limited credit history. The agreement, governed by Philippine law and structured under the Civil Code of the Philippines, establishes the guarantor's obligation to step in and fulfill the tenant's responsibilities if they default on their lease obligations. This document is particularly important in commercial leasing, where significant rental values are involved, and in residential leasing where landlords seek additional protection. The Lease Guaranty Agreement typically includes detailed provisions about the scope of the guarantee, enforcement mechanisms, and the specific circumstances under which the guarantor's obligations are triggered. It serves as a risk management tool for property owners while facilitating lease transactions that might otherwise be considered too risky.

1. Parties: Identifies and provides complete details of the Guarantor, Lessor (Beneficiary of the guaranty), and Lessee (Principal Debtor)

2. Background: Recites the existence of the lease agreement being guaranteed and explains the purpose of the guaranty

3. Definitions: Defines key terms used throughout the agreement, including 'Guaranteed Obligations', 'Lease Agreement', and 'Event of Default'

4. Guaranty: Sets out the core guaranty obligation and its scope, including whether it is continuing, limited, or unlimited

5. Nature of Guaranty: Specifies whether the guaranty is absolute, unconditional, irrevocable, and/or joint and several

6. Guarantor's Representations and Warranties: Contains guarantor's confirmations about their capacity, authority, and financial ability to provide the guaranty

7. Payment Obligations: Details the specific payment obligations of the guarantor, including timing and method of payment

8. Preservation of Rights: Establishes that the lessor's rights against the guarantor are preserved despite any amendments to the lease or extensions granted to the lessee

9. Waiver of Defenses: Lists specific defenses and rights that the guarantor waives to ensure the effectiveness of the guaranty

10. Duration and Termination: Specifies when the guaranty becomes effective and when it terminates

11. Enforcement: Sets out the process for making a demand under the guaranty and enforcement procedures

12. Notices: Specifies how and where notices must be delivered to all parties

13. Governing Law and Jurisdiction: Confirms that Philippine law governs and specifies which courts have jurisdiction

14. General Provisions: Contains standard boilerplate provisions including severability, entire agreement, and amendments