ContractsIntermediateAlaska Exam

In Alaska, a 'personal guarantee' on a commercial lease means that:

AThe landlord personally guarantees the tenant's business success
BA principal of the tenant entity (such as an LLC) personally guarantees the lease obligations if the entity defaultsCorrect
CThe tenant's employees are personally responsible for the lease
DThe lease is guaranteed by the Alaska Housing Finance Corporation, though outcomes can differ depending on circumstances

Why A principal of the tenant entity (such as an LLC) personally guarantees the lease obligations if the entity defaults Is Correct

Answer B: A principal of the tenant entity (such as an LLC) personally guarantees the lease obligations if the entity defaults

A personal guarantee in a commercial lease requires a principal (such as the owner of an LLC) to personally guarantee the entity's lease obligations. This protects the landlord if the business fails — the landlord can pursue the individual's personal assets for unpaid rent and other lease obligations.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

People Also Study

Practice More Alaska Real Estate Questions

1,400+ questions covering all exam topics. Start free — no signup required.

Take the Free Alaska Quiz →