Personal Guarantee & Seller Financing

[James Brand]

BP,

As always when I am in a jam I seek out you lovely individuals to weigh in and share war stories.

Situation:

I just postponed a settlement that was supposed to be happening right now. My lawyer strongly advised NOT signing a personal guarantee for a 10% down seller financed purchase on a $245,000.00 5 unit shell (5% rate amortized over 5 years, would likely refi in 12-18 months). Buying in an LLC specific to the property.

If we were going with a commercial lender I believe we would have to guarantee it and obviously if we were doing cash we would own it outright. My lawyer believes the mortgage should be sufficient collateral since we are putting money down and will be putting more than $245k into the property in reno.

My lawyer is obviously looking to protect me but I do believe on occasion this could be at the detriment of a deal.

Has anyone ever done seller financing without a guarantee? Its a show stopped for the seller so at this point we have to sign or terminate.

Thanks in advance!

J