Deed of guarantee and indemnity, Shop 6, 118 Dunning Street

Personal guarantee template with a cap and a notice of demand

A director asked to guarantee a lease wants to know one number: the most this can cost me. This three page deed answers it in a callout, capping the guarantor at $60,000 including interest and enforcement costs, then sets out the two steps the landlord has to take before a demand can be made at all.

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Deed of guarantee and indemnity · Shop 6, 118 Dunning Street · GI-2027-08Page 1 of 3
Deed of guarantee and indemnity · Shop 6, 118 Dunning Street · GI-2027-08Page 2 of 3
Deed of guarantee and indemnity · Shop 6, 118 Dunning Street · GI-2027-08Page 3 of 3
Deed of guarantee and indemnity

Made on 9 June 2027 between Crestmoor Property Holdings Pty Ltd, ABN 34 907 221 650, of Level 3, 40 Ellery Street, Parramatta NSW 2150, called the Landlord, and Anselm Farrow of 7 Coralie Avenue, Northmead NSW 2152, called the Guarantor, who is a director of Farrow Lune Pty Ltd, ABN 19 655 300 184, called the Tenant.

$60,000
Cap on liability
$78,000
Annual rent
5 years
Lease term
10
Days to pay a demand
1. The lease this guarantee supports
1.1
The Lease
Shop 6, 118 Dunning Street, Parramatta, five years from 1 July 2027 at $78,000 a year plus outgoings and GST, with a bank guarantee of three months rent. It is a retail shop lease under the Retail Leases Act 1994.
1.2
Why the Landlord asked for this
The Tenant was incorporated in March 2027 and has no trading history. The Landlord granted the Lease on the basis that the Guarantor stands behind it personally.
2. What is guaranteed
2.1
The guarantee
The Guarantor guarantees that the Tenant will pay the rent, outgoings, interest and any other money owing under the Lease, and will perform its other obligations.
2.2
The indemnity
Separately, the Guarantor indemnifies the Landlord against loss caused by the Tenant not performing, including where the Lease is void, voidable or disclaimed by a liquidator.
The cap is the whole of the exposure
Total liability under this deed, under both the guarantee and the indemnity, is capped at $60,000. That figure includes interest and enforcement costs, so nothing can be added on top. Once the Landlord has recovered $60,000 the Guarantor owes nothing further.
The cap is the whole of the exposure
Total liability under this deed, under both the guarantee and the indemnity, is capped at $60,000. That figure includes interest and enforcement costs, so nothing can be added on top. Once the Landlord has recovered $60,000 the Guarantor owes nothing further.
The cap is the whole of the exposure
Total liability under this deed, under both the guarantee and the indemnity, is capped at $60,000. That figure includes interest and enforcement costs, so nothing can be added on top. Once the Landlord has recovered $60,000 the Guarantor owes nothing further.
2.3
What the cap does not do
The cap limits what the Guarantor pays. It does not limit what the Tenant owes, and it does not reduce the bank guarantee, which the Landlord may call on first or last as it chooses.
3. How the Landlord makes a claim
3.1
The Tenant is asked first
Before demanding from the Guarantor, the Landlord gives the Tenant written notice of the amount owing and 14 days to pay it. This is a condition of the demand, not a courtesy.
3.2
The notice of demand
A demand is in writing, states the amount and how it is calculated, attaches the notice given to the Tenant, and states the running total already recovered against the cap.
3.3
Ten business days to pay
A valid demand is paid within 10 business days, without set off. The Guarantor may dispute the calculation in writing within those 10 days, and the Landlord answers before enforcing.
3.4
Continuing guarantee
It is not discharged by a payment, by the Landlord giving the Tenant time, by a rent review or by liquidation, and it continues for any holding over after the term ends.
4. When the Guarantor is released
4.1
On a proper assignment
Where the Lease is assigned for an ongoing business and the assignment and disclosure procedure in the Retail Leases Act 1994 is followed, the protection the Act gives the assignor extends to the Guarantor.
4.2
On the cap being reached, or the term ending
This deed ends when the Landlord has recovered $60,000 under it, or six months after the Tenant gives up possession and the make good obligations are complete, whichever comes first.
5. Advice, and signing
5.1
Independent advice
This deed was given to the Guarantor on 26 May 2027 with a written recommendation to take independent legal and financial advice. He took advice from Hollis Vaughan Lawyers on 3 June 2027.
5.2
What the Guarantor understands
That this is a personal obligation, that the Landlord need not sue the Tenant first once clause 3.1 is met, that a judgment may be enforced against his assets, and that the most he can be asked for is $60,000.
5.3
Law, notices and counterparts
Governed by the law of New South Wales. Notices are in writing to the addresses above, and the deed may be signed in counterparts and by electronic signature.

Executed as a deed. The Guarantor signs in the presence of a witness who is not a party to this deed and not a member of his immediate family.

For Crestmoor Property Holdings Pty Ltd
Name
:
Date
:
Signed by Anselm Farrow, Guarantor, before a witness
Guarantor
:
Witness
:
Date
:

Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Parties
The landlord, the guarantor, the tenant company, and a stats strip with the cap and the rent.
1. The lease this guarantee supports
The shop, the five year term, the rent and bond, and why the landlord asked for a guarantee.
2. What is guaranteed
The guarantee, the separate indemnity, the $60,000 cap callout and what the cap does not do.
3. How the Landlord makes a claim
Notice to the tenant first, what a demand must contain, ten days to pay, and a continuing guarantee.
4. When the Guarantor is released
Release on a proper assignment, and on the cap being reached or the term ending.
5. Advice, and signing
The advice dates, the four things the guarantor understands, governing law and counterparts.
Execution
A block for the landlord and one for the guarantor signing before a witness.

How to adapt this document

For a guarantee of a supply account rather than a lease, replace the lease description in clause 1.1 with the credit application and the trading terms, and change the cap to a credit limit plus a stated margin, because a supplier who lifts the limit unilaterally should not lift the guarantee with it. For two guarantors, add a clause saying whether liability is joint and several and whether the cap is shared or applies to each, since a $60,000 cap that quietly means $120,000 across two people is the kind of surprise that ends up in court. For a guarantee given by a spouse who takes no benefit from the business, do not rely on clause 5.1 alone: get a solicitor's certificate signed separately, because the advice acknowledgement carries much less weight when the guarantor gains nothing.

Which law the terms follow

The deed is written for a New South Wales retail shop lease and names the instruments that apply to it. Clause 1.1 records that the lease is a retail shop lease under the Retail Leases Act 1994, which is the Act that governs shop leases in New South Wales and which sets the disclosure statement, the minimum term and the assignment procedure. Clause 4.1 follows the protection the Act gives an assignor who assigns a lease in connection with an ongoing business and complies with the assignment and disclosure requirements, and which the Act extends to that assignor's guarantor. A retail lease dispute in New South Wales is generally mediated by the NSW Small Business Commission as Registrar of Retail Tenancy Disputes before it can go further, which is worth knowing before a demand is made under clause 3. The deed is governed by the law of New South Wales, the landlord's ABN and the tenant company's ABN both appear in the parties clause, and the rent is stated as exclusive of outgoings and GST.

What makes this document work

The cap is a number with nothing allowed on top of it

The warning callout says total liability under both the guarantee and the indemnity is capped at $60,000, that the figure includes interest and the landlord's enforcement costs, and that once $60,000 is recovered the guarantor owes nothing further. An uncapped guarantee on an $78,000 a year lease is an open cheque for five years.

The landlord has to ask the tenant first

Clause 3.1 makes a written notice to the tenant and 14 days to pay a condition of any demand on the guarantor, and adds that this is a condition, not a courtesy. Clause 3.2 then requires the demand to attach that notice and state the running total already recovered against the cap.

The advice acknowledgement names dates and a firm

Clause 5.1 records that the deed was given to the guarantor on 26 May 2027 with a written recommendation to take independent legal and financial advice, and that he took advice on 3 June. Clause 5.2 then lists the four things he understands, including that a judgment may be enforced against his assets.

Questions people ask

What is the difference between a guarantee and an indemnity?

A guarantee is a promise to answer for someone else's obligation, so it falls away if the underlying obligation does. An indemnity is a primary promise to cover a loss and survives. That is why clause 2.2 gives the landlord both, and says the indemnity applies even where the lease is void, voidable or disclaimed by a liquidator.

Can a personal guarantee be capped?

Yes, and it should be. This deed caps total liability at $60,000, about nine months of rent, and says the figure includes interest and enforcement costs so nothing can be stacked on top. A cap is the single most valuable thing a guarantor can negotiate, and it is far easier to ask for before the lease is signed.

Does a guarantor have to be sued after the tenant?

Not usually, which is why the procedure in clause 3 matters. Under this deed the landlord must give the tenant written notice and 14 days to pay before demanding from the guarantor, but once that step is done it may claim against the guarantor without first suing the tenant. Clause 5.2 spells that out so nobody is surprised.

Is a guarantor released when the lease is assigned?

Where the lease is a retail shop lease assigned in connection with an ongoing business and the assignment and disclosure procedure in the Retail Leases Act 1994 is followed, the protection the Act gives the assignor extends to the assignor's guarantor. Clause 4.1 says so. Follow the procedure exactly, because the protection turns on it.

Should a guarantee be signed as a deed and witnessed?

It is the safer course. A deed binds without consideration passing to the guarantor, which matters because the guarantor personally receives nothing. This one is executed as a deed with the guarantor signing before a witness who is not a party and not a member of his immediate family, which is what the signature block sets out.

When does a personal guarantee end?

Under clause 4.2, when the landlord has recovered $60,000 under it, or six months after the tenant gives up possession and the make good obligations are complete, whichever comes first. Without an end date a guarantee runs through every holding over and every renewal, which is how a director ends up liable years after leaving the business.

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