Personal Guarantee question

[Yoni R.]

I need to personally guarantee a mortgage for a refi that I am doing on an investment property of mine. The property is under an LLC.

I have other properties that are owned with other partners and those are also in LLC’s.

The question is if the other LLC's can be pierced due to my ownership in them if the personal guarantee on that other mortgage I have is activated?

For example: Property 1 owned by ABC LLC (I am 100% owner). I have a personal guarantee on the mortgage.

Property 2 owned by XYZ LLC (50% me %50 Bob)

If there is ever a situation that the personal guarantee for ABC LLC is activated and I am now personally on the hook can the indemnitors now go after XYZ LLC or after my shares in XYZ LLC?

[Erik W.]

@Yoni R., that's probably a question for your attorney, but my understanding is NO, unless the bank requires you to sign a guarantee on behalf of your other LLC(s).

Btw, a fun fact in Missouri--my stat--is that a lender/collector cannot garnishee or levy an asset or account owned by spouses, unless both spouses signed to personally guarantee the debt.  So let's say I'm in your same scenario and I am the only one signing a personal guarantee on that $1 million note.  The lender / collector cannot seize a bank account or put a lien on a rental property as long as both my wife and I are listed as co-owners.  Note: you can't add your spouse as an owner once legal action is started against you.  If you do, the judge can undo that action citing that you were attempting to hide assets from a legitimate creditor, which falls under fraudulent transfer of assets.

So, don't know if your married or if your state has the same rules, but that was something cool I learned recently from my Estate Planning attorney.

Bottom line: I'd ask a Pro to be sure.