How Do I Get a Personal-Guarantee Burn-Down Schedule?

Curated by Kory White · Fractional CRO, CRO Syndicate

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📅 Published Jun 23, 2026 · 7 min read

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How Do I Get a Personal-Guarantee Burn-Down Schedule?

Direct Answer

The money move: never sign a full-term, unlimited personal guarantee — demand a burn-down that shrinks your personal liability to zero over 24–36 months of good payment. Landlords ask for a personal guarantee (PG) when your company lacks the credit history or balance sheet to stand on its own.

Their default ask is a full-term guarantee: you are personally on the hook for every dollar of rent for the entire 7- or 10-year lease. On a 10,000 SF deal at $35/SF, that is $350,000 a year of personal exposure — your house, your savings, and your kids' college fund all riding on a lease that outlasts most businesses.

The fix is a burn-down (or "rolling") guarantee, where your personal liability declines on a fixed schedule as long as you pay on time. A strong burn-down caps exposure at 6–12 months of rent up front, then reduces by one-third or one-half each year, hitting $0 after 24–36 months. The landlord still gets real protection during the risky early years when most tenants fail; you stop betting your personal net worth on year seven of a deal you cannot predict.

Ask for it at the LOI — it is a standard, well-understood structure, and landlords grant it routinely to tenants who push for it.

What a Personal Guarantee Actually Costs You

A full personal guarantee means the lease is no longer a corporate risk — it is your risk. If the business fails in year three, the landlord can sue you personally for the remaining four years of rent plus interest and costs. That is the entire purpose of the PG: it pierces the corporate veil that you formed an LLC to create in the first place.

Many founders sign it without reading because the landlord frames it as routine, and only discover the exposure when the business stumbles.

Know the four common structures so you can name the one you want:

Unlimited PG: full remaining rent, no cap. This is the worst case and the landlord's opening ask.
Capped PG: liability limited to a fixed dollar figure, often 12 months' rent.
Burn-down PG: capped and declining over time as you pay — the structure to fight for.
Good-guy guarantee: you are liable only until you vacate and return the keys properly, common in many urban office and retail markets.

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How a Burn-Down Schedule Works

flowchart TD A[Sign lease with burn-down PG] --> B[Year 0-1: full cap<br/>e.g. 12 months rent = 350K] B --> C{Paid on time, no default?} C -->|Yes| D[Year 2: cap drops to 8 months<br/>~233K] D --> E{Still clean?} E -->|Yes| F[Year 3: cap drops to 4 months<br/>~117K] F --> G{Still clean?} G -->|Yes| H[Year 4+: PG burns to 0<br/>corporate liability only] C -->|Default| I[PG resets to full cap] E -->|Default| I G -->|Default| I

A typical burn-down on a seven-year lease moves like this. In months 0–12, your liability is capped at 12 months' rent, roughly $350,000. At the start of year two, the cap drops to 8 months, about $233,000.

By year three, it falls to 4 months, around $117,000. At the end of year three, it burns to $0 and you carry only corporate liability from that point forward.

The reduction is conditional on clean payment. Miss your rent or fall into default and the PG snaps back to the full cap. That is a fair trade — the landlord is being compensated for de-risking your early, fragile years, and you are being rewarded for proving you pay. The whole structure rewards the behavior both sides want.

How to Negotiate the Burn-Down

graph LR A[LOI stage] --> B[Propose burn-down vs full PG] B --> C[Set starting cap: 6-12 months rent] C --> D[Set reduction: 1/3 or 1/2 per year] D --> E[Set burn-to-zero: month 24-36] E --> F[Define default reset narrowly] F --> G[Add good-guy carve-out on early exit]

Open with no PG at all. If your company has two or more years of profitable operating history, argue for a corporate-only lease backed by a modest security deposit instead of any personal guarantee.
Counter the full-term ask with a burn-down. Frame it plainly: "I will guarantee the risky early years; after I have proven payment, the company stands on its own." Landlords find this reasonable because it matches their actual risk curve.
Set the starting cap at 6–12 months, never the full remaining term.
Tie the reduction to clean payment, and define "default" narrowly so that only a real monetary default beyond a cure period resets the guarantee — not a technical or paperwork breach.
Add a good-guy clause so that if you surrender the space properly, your liability for future rent stops even before the burn-down schedule completes.

Strengthen Your Position Before You Ask

Landlords size the guarantee to the risk they perceive, so lower the risk and you lower the guarantee. Each of these levers gives the landlord comfort and gives you a shorter PG in return.

Offer a larger security deposit — three to four months — in exchange for a shorter personal guarantee.
Provide real financials showing revenue, runway, and margins. A demonstrably profitable company earns a shorter PG, or none at all.
Offer a letter of credit instead of a personal guarantee. It caps the landlord's downside without ever touching your personal home or savings.
Trade term for a shorter PG. A longer lease gives the landlord the stability they want, so they will often accept a faster burn-down in exchange for the extra years.

Red Flags to Strike

Before you sign, hunt down and remove these clauses, each of which quietly expands your personal exposure beyond what you agreed to:

"Joint and several" PG across multiple owners — each owner can be held liable for 100% of the obligation. Push for several-only or pro-rata liability instead.
PG covers all costs, not just rent — limit it strictly to base rent, and exclude consequential damages and the landlord's claimed lost profit.
No cure period before reset — demand at least a 10-business-day cure before any default resets the burn-down to full.
Spouse signature required — refuse it. Keep marital and separate assets out of the guarantee unless a lender legally forces the issue.

FAQ

What is a burn-down personal guarantee? A personal guarantee whose dollar cap declines on a set schedule — typically from 6–12 months' rent down to $0 over 24–36 months — as long as you pay on time. It protects the landlord during the risky early years while ending your personal exposure once you have proven yourself reliable.

Will landlords actually agree to a burn-down? Yes — it is a standard, well-understood structure. Landlords grant burn-downs routinely to tenants who ask, especially those with operating history, a solid deposit, or a longer term. The mistake is signing the landlord's default full-term PG without ever countering.

What's the difference between a burn-down and a good-guy guarantee? A burn-down reduces your liability over time based on payment performance. A good-guy guarantee limits liability to the period you actually occupy — once you vacate and hand over the keys properly, future-rent liability ends.

Negotiate for both: a good-guy carve-out sitting inside a burn-down schedule.

What resets the burn-down to full liability? Only a genuine monetary default should reset it, and only after a cure period. Strike any language that lets a technical or non-monetary breach snap the guarantee back to full. Demand at least a 10-business-day cure window before any reset can trigger.

Sources

CBRE, "Tenant Representation: Lease Guarantee and Credit Structures."
JLL, "Office Leasing — Personal Guarantee and Security Deposit Benchmarks."
Cushman & Wakefield, "Tenant Advisory: Negotiating Guarantees and Letters of Credit."
NAIOP — commercial lease guarantee structuring and burn-down norms.
BOMA International — leasing risk and security standards.
The Tenant Advisor — good-guy guarantee and burn-down negotiation guidance.

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<svg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1200 340" role="img" aria-label="How Do I Get a Personal-Guarantee Burn-Down Schedule? — PULSE Buildouts"><rect width="1200" height="340" fill="#EBE9DE"/><rect width="14" height="340" fill="#C0531F"/><text x="58" y="116" font-family="Arial,Helvetica,sans-serif" font-size="32" font-weight="800" letter-spacing="3" fill="#C0531F">PULSE BUILDOUTS · COMMERCIAL REAL ESTATE</text><text x="56" y="198" font-family="Arial,Helvetica,sans-serif" font-size="60" font-weight="800" fill="#2b2b2b">Save money. Don’t get screwed.</text><text x="58" y="258" font-family="Arial,Helvetica,sans-serif" font-size="30" font-weight="600" fill="#6b5b4d">Leases, TI, NNN &amp; buildouts — negotiated in your favor</text><g transform="translate(1010,86)" fill="none" stroke="#C0531F" stroke-width="9" stroke-linejoin="round"><rect x="20" y="40" width="150" height="130"/><line x1="20" y1="40" x2="95" y2="6"/><line x1="170" y1="40" x2="95" y2="6"/><rect x="50" y="80" width="36" height="36"/><rect x="104" y="80" width="36" height="36"/><rect x="74" y="128" width="42" height="42"/></g></svg>

# How Do I Get a Personal-Guarantee Burn-Down Schedule?

## Direct Answer

The money move: **never sign a full-term, unlimited personal guarantee — demand a burn-down that shrinks your personal liability to zero over 24–36 months of good payment.** Landlords ask for a personal guarantee (PG) when your company lacks the credit history or balance sheet to stand on its own. Their default ask is a full-term guarantee: you are personally on the hook for **every dollar of rent for the entire 7- or 10-year lease.** On a **10,000 SF deal at $35/SF**, that is **$350,000 a year** of personal exposure — your house, your savings, and your kids' college fund all riding on a lease that outlasts most businesses.

The fix is a **burn-down (or "rolling") guarantee**, where your personal liability **declines on a fixed schedule** as long as you pay on time. A strong burn-down caps exposure at **6–12 months of rent up front, then reduces by one-third or one-half each year, hitting $0 after 24–36 months.** The landlord still gets real protection during the risky early years when most tenants fail; you stop betting your personal net worth on year seven of a deal you cannot predict. Ask for it at the LOI — it is a standard, well-understood structure, and landlords grant it routinely to tenants who push for it.

## What a Personal Guarantee Actually Costs You

A full personal guarantee means **the lease is no longer a corporate risk — it is your risk.** If the business fails in year three, the landlord can sue you personally for the **remaining four years of rent** plus interest and costs. That is the entire purpose of the PG: it pierces the corporate veil that you formed an LLC to create in the first place. Many founders sign it without reading because the landlord frames it as routine, and only discover the exposure when the business stumbles.

Know the four common structures so you can name the one you want:

- **Unlimited PG:** full remaining rent, no cap. This is the worst case and the landlord's opening ask.
- **Capped PG:** liability limited to a fixed dollar figure, often **12 months' rent**.
- **Burn-down PG:** capped and declining over time as you pay — the structure to fight for.
- **Good-guy guarantee:** you are liable only until you vacate and return the keys properly, common in many urban office and retail markets.


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## How a Burn-Down Schedule Works

```mermaid
flowchart TD
    A[Sign lease with burn-down PG] --> B[Year 0-1: full cap<br/>e.g. 12 months rent = 350K]
    B --> C{Paid on time, no default?}
    C -->|Yes| D[Year 2: cap drops to 8 months<br/>~233K]
    D --> E{Still clean?}
    E -->|Yes| F[Year 3: cap drops to 4 months<br/>~117K]
    F --> G{Still clean?}
    G -->|Yes| H[Year 4+: PG burns to 0<br/>corporate liability only]
    C -->|Default| I[PG resets to full cap]
    E -->|Default| I
    G -->|Default| I
```

A typical burn-down on a seven-year lease moves like this. In **months 0–12**, your liability is capped at **12 months' rent**, roughly $350,000. At the start of **year two**, the cap drops to **8 months**, about $233,000. By **year three**, it falls to **4 months**, around $117,000. At the end of year three, it **burns to $0** and you carry only corporate liability from that point forward.

The reduction is **conditional on clean payment.** Miss your rent or fall into default and the PG snaps back to the full cap. That is a fair trade — the landlord is being compensated for de-risking your early, fragile years, and you are being rewarded for proving you pay. The whole structure rewards the behavior both sides want.

## How to Negotiate the Burn-Down

```mermaid
graph LR
    A[LOI stage] --> B[Propose burn-down vs full PG]
    B --> C[Set starting cap: 6-12 months rent]
    C --> D[Set reduction: 1/3 or 1/2 per year]
    D --> E[Set burn-to-zero: month 24-36]
    E --> F[Define default reset narrowly]
    F --> G[Add good-guy carve-out on early exit]
```

- **Open with no PG at all.** If your company has two or more years of profitable operating history, argue for a corporate-only lease backed by a modest security deposit instead of any personal guarantee.
- **Counter the full-term ask with a burn-down.** Frame it plainly: "I will guarantee the risky early years; after I have proven payment, the company stands on its own." Landlords find this reasonable because it matches their actual risk curve.
- **Set the starting cap at 6–12 months,** never the full remaining term.
- **Tie the reduction to clean payment,** and define "default" narrowly so that only a real monetary default beyond a cure period resets the guarantee — not a technical or paperwork breach.
- **Add a good-guy clause** so that if you surrender the space properly, your liability for future rent stops even before the burn-down schedule completes.

## Strengthen Your Position Before You Ask

Landlords size the guarantee to the risk they perceive, so lower the risk and you lower the guarantee. Each of these levers gives the landlord comfort and gives you a shorter PG in return.

- **Offer a larger security deposit** — three to four months — in exchange for a shorter personal guarantee.
- **Provide real financials** showing revenue, runway, and margins. A demonstrably profitable company earns a shorter PG, or none at all.
- **Offer a letter of credit** instead of a personal guarantee. It caps the landlord's downside without ever touching your personal home or savings.
- **Trade term for a shorter PG.** A longer lease gives the landlord the stability they want, so they will often accept a faster burn-down in exchange for the extra years.

## Red Flags to Strike

Before you sign, hunt down and remove these clauses, each of which quietly expands your personal exposure beyond what you agreed to:

- **"Joint and several" PG across multiple owners** — each owner can be held liable for 100% of the obligation. Push for several-only or pro-rata liability instead.
- **PG covers all costs, not just rent** — limit it strictly to base rent, and exclude consequential damages and the landlord's claimed lost profit.
- **No cure period before reset** — demand at least a **10-business-day cure** before any default resets the burn-down to full.
- **Spouse signature required** — refuse it. Keep marital and separate assets out of the guarantee unless a lender legally forces the issue.

## FAQ

**What is a burn-down personal guarantee?**
A personal guarantee whose dollar cap **declines on a set schedule** — typically from 6–12 months' rent down to **$0 over 24–36 months** — as long as you pay on time. It protects the landlord during the risky early years while ending your personal exposure once you have proven yourself reliable.

**Will landlords actually agree to a burn-down?**
Yes — it is a standard, well-understood structure. Landlords grant burn-downs routinely to tenants who ask, especially those with operating history, a solid deposit, or a longer term. The mistake is signing the landlord's default full-term PG without ever countering.

**What's the difference between a burn-down and a good-guy guarantee?**
A burn-down reduces your liability over time based on payment performance. A good-guy guarantee limits liability to the period you actually occupy — once you vacate and hand over the keys properly, future-rent liability ends. Negotiate for both: a good-guy carve-out sitting inside a burn-down schedule.

**What resets the burn-down to full liability?**
Only a genuine monetary default should reset it, and only after a cure period. Strike any language that lets a technical or non-monetary breach snap the guarantee back to full. Demand at least a **10-business-day cure** window before any reset can trigger.

## Sources

- CBRE, "Tenant Representation: Lease Guarantee and Credit Structures."
- JLL, "Office Leasing — Personal Guarantee and Security Deposit Benchmarks."
- Cushman & Wakefield, "Tenant Advisory: Negotiating Guarantees and Letters of Credit."
- NAIOP — commercial lease guarantee structuring and burn-down norms.
- BOMA International — leasing risk and security standards.
- The Tenant Advisor — good-guy guarantee and burn-down negotiation guidance.

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How Do I Get a Personal-Guarantee Burn-Down Schedule?

How Do I Get a Personal-Guarantee Burn-Down Schedule?

Direct Answer

What a Personal Guarantee Actually Costs You

How a Burn-Down Schedule Works

How to Negotiate the Burn-Down

Strengthen Your Position Before You Ask

Red Flags to Strike

FAQ

Sources

What does the score mean?