A New Form of Security

The “bond lease” is a new way for commercial landlords to protect themselves against tenants who don’t honor lease agreements. It offers several advantages over personal guarantees and letters of credit.

Advantages to tenant:

– Shields individual partners from personal liability.

– Does not impinge on a firm’s borrowing capacity.

– Landlord must file a notice of default before the bond can be collected.

Advantages to landlord:

– Avoids need to chase down individual partners if a firm disbands or otherwise defaults on lease.

– The bond is a guaranteed form of payment.