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It’s interesting how badly guaranties can get screwed up in California commercial real estate loans.  You wouldn’t think it would be that hard:  the basic idea of a guaranty is fairly simple, and, after all, lots of loan documents started with forms written by reasonably competent lawyers.  Piece of cake, right?  Unfortunately, no:  in fact, when reviewing loan papers I almost always check the guarantees first.  The California case law on guarantees is a snake pit, and has been for many years:  it seems the courts just don’t like them, and set up all sorts of tricks and defenses.  Also, for some reason, guarantees seem to bring out the “clever” side of would-be creative drafters.  Often, they’re a little too clever, and the instrument might not be enforceable or, even if technically enforceable, may not meet the lender’s goals.

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