The Lease Guaranty agreement is a crucial document in South African property leasing arrangements, used when additional security is required beyond the tenant's own covenant. It is particularly relevant when a tenant's financial standing alone may not satisfy the landlord's requirements, or in commercial situations where parent company guarantees are needed. The agreement must comply with South African legislation, including the General Law Amendment Act 50 of 1956 and the Rental Housing Act 50 of 1999. The document typically includes detailed provisions about the guarantee's scope, the guarantor's obligations, enforcement mechanisms, and the duration of the guarantee. It serves as a risk mitigation tool for landlords while enabling tenants to secure leases they might otherwise be unable to obtain.
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1. Parties: Identification of the Guarantor, Landlord (beneficiary of the guarantee), and Tenant (primary debtor)
2. Background: Context of the guarantee, including reference to the primary lease agreement and the reason for the guarantee
3. Definitions: Definitions of key terms used in the agreement, including 'Lease Agreement', 'Guaranteed Obligations', and 'Guarantee Period'
4. Guarantee: The core guarantee provision, including the scope and extent of the guarantor's liability
5. Nature of Guarantee: Specification that this is a continuing, unconditional and irrevocable guarantee
6. Duration: Term of the guarantee, including start date and conditions for termination
7. Guarantor's Obligations: Detailed description of what the guarantor is liable for, including rent, damages, and other costs
8. Enforcement: Circumstances under which the guarantee can be enforced and the process for doing so
9. Preservation of Rights: Landlord's rights in relation to other securities or guarantees
10. Costs and Interest: Responsibility for legal costs and interest on overdue amounts
11. Notices: Process and requirements for serving notices under the guarantee
12. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement
13. Execution: Signature blocks and execution requirements
1. Multiple Guarantors: Section dealing with joint and several liability when there is more than one guarantor
2. Corporate Guarantor Provisions: Additional provisions required when the guarantor is a company, including warranties of authority and financial condition
3. Limit of Liability: Optional cap on the guarantor's total liability, if agreed between the parties
4. Security Provisions: Additional security measures such as cession of claims or pledge of assets
5. Step-In Rights: Provisions allowing the guarantor to take over the lease in case of tenant default
6. Financial Reporting: Requirements for regular financial updates from the guarantor, typically used for corporate guarantors
7. Release Conditions: Specific conditions under which the guarantor may be released from obligations
1. Schedule 1 - Primary Lease Agreement: Copy or key details of the lease agreement being guaranteed
2. Schedule 2 - Guaranteed Obligations: Detailed list of all obligations covered by the guarantee
3. Schedule 3 - Property Details: Description of the leased property
4. Appendix A - Guarantor's Details: Full details of the guarantor including financial information where relevant
5. Appendix B - Enforcement Procedures: Detailed procedures for enforcing the guarantee
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