Personal Guaranty of a Business Lease or Loan in California: What the Owner Owes

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

A personal guaranty is an owner's written promise to pay the company's debt if the company does not. If you personally guaranteed your LLC's lease and the business closed, the landlord can sue you personally in California, and it does not have to sue the LLC first. Under Civil Code section 2807, a guarantor of payment is liable immediately on the company's default. As a rule, you cannot owe more than the company does. Kolmogorov Law, P.C. represents guarantors and creditors in Orange County, Los Angeles, and across California.

Call (909) 235-6116 or contact us online to discuss a guaranty you signed, or one you need to enforce.

What a personal guaranty is under California law

People search for "personal guarantee." The document is usually titled "guaranty." They are the same thing. California also treats guarantors and sureties alike: either is a person who promises to answer for the debt, default, or miscarriage of another. (Civ. Code, § 2787.)

The promise must be in writing and signed by the guarantor, although the writing does not need to recite consideration. (Civ. Code, § 2793.) The statute of frauds says the same about a special promise to answer for another's debt. (Civ. Code, § 1624, subd. (a)(2).) There are statutory exceptions, including one for a promise made on consideration that benefits the person making it. (Civ. Code, § 2794.) An oral "I will stand behind it" is hard to enforce, but an owner should not assume it is worthless. Our statute of frauds page covers the writing rules.

A guaranty is why the LLC or corporate shield does not help. The creditor is not trying to pierce the corporate veil. It is suing on a separate contract that you signed as an individual.

When the creditor can sue the guarantor

Sooner than most owners expect. A guarantor who has assumed liability for payment or performance is liable to the creditor immediately upon the principal's default, without demand or notice. (Civ. Code, § 2807.) The landlord or lender may name the company and the guarantor in one lawsuit, or the guarantor alone.

California does give a guarantor the right to require the creditor to proceed against the principal first, and a creditor that neglects to do so loses its claim to the extent the guarantor is prejudiced. (Civ. Code, § 2845.) In practice that right is usually signed away. More on waivers below.

How much a guarantor can owe

The default ceiling is the company's own debt. A guarantor's obligation may be neither larger in amount nor more burdensome than the principal's, and if it is written more broadly it is reduced in proportion. (Civ. Code, § 2809.)

On a lease, that rule imports the tenant's protections. When a tenant breaches and abandons, the landlord may recover unpaid rent, but rent after termination is reduced by the rental loss the tenant proves could reasonably have been avoided. (Civ. Code, § 1951.2, subd. (a).) A guarantor ordinarily gets the benefit of that offset. If the landlord relet the space in four months at a similar rent, the claim is not three years of rent. Our pages on breaking a commercial lease early and commercial lease disputes go further.

The document may also limit itself. Some guaranties are capped at a dollar figure, or shrink after a period of on-time payment. Others add attorney fees and interest. Read the whole page, not the signature block.

Continuing guaranties and revocation

A continuing guaranty covers future liability under successive transactions, such as a supplier's open credit line or a revolving loan. (Civ. Code, § 2814.) It may be revoked at any time as to future transactions, unless there is a continuing consideration the guarantor does not renounce. (Civ. Code, § 2815.) Some guaranties waive this right, as discussed below.

Two practical points follow. Revocation does not erase debt already incurred. And an owner who sells the company or leaves it should send written revocation to every creditor holding a continuing guaranty, because the guaranty does not end by itself when ownership changes. A guaranty of a single multi-year lease is usually much harder to revoke, since the landlord's consideration continues for the term.

Suretyship defenses, and why most are waived

California law protects guarantors by default. A guarantor is exonerated if the creditor, without the guarantor's consent, alters the original obligation in any respect or impairs its remedies against the principal. (Civ. Code, § 2819.) One Court of Appeal, in a surety bond case, asked whether the change was material and not contemplated by the surety. A significant lease amendment or loan modification signed without the guarantor could, in theory, release the guarantor.

Creditors know this. Nearly every commercial guaranty contains a waiver paragraph, and the Legislature has made those waivers easy to enforce. A guarantor may waive rights of subrogation and reimbursement, the defenses in the suretyship statutes, and defenses based on real property security. No particular language is required. (Civ. Code, § 2856, subds. (a), (b).)

So the first thing I read in any guaranty is the waiver section. If it is thorough, the defense shifts to the amount owed, the creditor's own conduct, and the terms of the underlying deal.

If you signed the guaranty

Confirm you signed as an individual. A signature that shows only a corporate title raises a real question about who is bound.
Find every guaranty still outstanding, including ones in vendor credit applications and equipment or merchant cash advance agreements.
Check for a cap, an expiration, or a release that was promised when the business was sold.
Do not ignore a demand. Guarantors who engage early often negotiate a reduced payoff, because the creditor also wants to avoid a lawsuit.

Married owners ask whether a spouse who did not sign is affected. That depends on California's community property rules and is worth raising before you sign, not after.

Owners also ask whether a creditor can come after the house. A judgment on a guaranty is a personal judgment, and what it can reach turns on exemption and community property rules beyond the scope of this page.

If you hold the guaranty

Landlords, lenders, and suppliers lose guaranty cases on paperwork. Have the owner sign individually, on a separate signature line. Get the guarantor's written consent to every amendment, even with a waiver in place. Keep the default notices and the accounting of what is owed.

Watch the calendar. An action on a written contract generally must be filed within four years. (Code Civ. Proc., § 337, subd. (a).) Where the debt is a loan, our page on promissory note defaults explains how the note and the guaranty are sued on together.

What to bring to the first meeting

The guaranty, and the lease, note, or credit agreement it supports.
Every amendment, extension, or assignment, signed or not.
Default notices, demand letters, and the creditor's statement of the amount due.
Any written revocation or release.
If the business was sold, the purchase agreement.

Frequently asked questions

I personally guaranteed my LLC's lease and the business closed. Can the landlord sue me personally in California?

Yes. A guaranty is your own contract with the landlord, separate from the LLC. Under California Civil Code section 2807, a guarantor is liable immediately when the tenant defaults, without demand or notice. The amount is generally limited to what the LLC owes, which on a lease is reduced by rent the landlord could reasonably have recovered by reletting.

Does a personal guarantee have to be in writing in California?

Generally yes. Civil Code section 2793 requires a suretyship obligation to be in writing and signed by the guarantor, and the statute of frauds treats a promise to answer for another's debt the same way. Statutory exceptions exist where the promise is treated as the promisor's own original obligation.

Can I cancel a personal guaranty after I sell my business?

Unless the guaranty validly waived the right, you can revoke a continuing guaranty as to future transactions under California Civil Code section 2815, but revocation does not release debt that already exists. Selling the company does not end the guaranty. Ask the creditor for a written release at closing, and send written revocation to any supplier or lender still extending credit.

The lender changed the loan terms with my former partner without telling me. Am I still bound by the guaranty I signed?

Possibly not, but check the waivers first. California exonerates a guarantor when the creditor materially alters the original obligation without the guarantor's consent. Most commercial guaranties waive that defense in advance, and Civil Code section 2856 makes such waivers enforceable without special wording. The outcome usually turns on the exact text.

Can a creditor sue the guarantor without suing the company first?

Yes. California does not require a creditor to exhaust its remedies against the business before suing a guarantor of payment. A guarantor has a statutory right to demand that the creditor proceed against the principal, but commercial guaranties routinely waive it. Creditors often sue both in the same case.

Talk to a California breach of contract attorney

If a landlord or lender is pursuing you on a guaranty, or you need to enforce one, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and represents businesses and owners in Orange County, Los Angeles, and throughout California.

This page provides general information about California law and is not legal advice. Outcomes depend on the guaranty, the facts, and the court.