Personal Guarantee ?

[skyhawk172]

What is the name of your state (only U.S. law)? WI

We purchased a business a number of years ago and the previous owners took a second mortgage on the business and the real estate. The business has since failed and we had to sell the property in a short sale. The previous owners signed off on the sale taking $1000 at closing but the mortgage is still there.

After the business failed, we stopped paying on the second mortgages. The holders have now files a lawsuit to collect the remaining amount ($65k). The original note we signed had a personal guarantee but... All it has is a signature line at the bottom of the contract saying "Personal Guarantee". We are questioning the validity of that guarantee. Doesn't there need to be more to it? It doesn't say anything about what that guarantee means or what we are agreeing to.

Do we have a case here? Any thoughts?

 

[tranquility]

Sorry, no. While I bet there is more, I bet whatever place has jurisdiction over this knows what a personal guarantee is. If you were a client I'm sure I'd come to a different conclusion, I really don't see where you can go with this.

 

[skyhawk172]

Normally I have no issues with paying the debt. We borrowed it - we should pay. But this one has in interesting twist. The business is a salon. The seller also became an employee of business after the sale (mistake #1 !!). There was some bad blood between her and us and she quit with no notice taking 3 other employees to another salon. Because she was the most Sr. member she accounted for about 40% of the overall sales. We explained that she would seriously impair our ability to pay her back but she didn't care and left anyway. The business failed shortly thereafter. We could not recover 50% in sales in the midst of the recession.

So here we are now.... No business and owing them money.