Someone told me this week that a personal guarantee on a bridge note "doesn't really matter" because the deal will be done in six months anyway.
I have seen that sentence cost someone $340,000 in Indianapolis in 2021. The deal ran eleven months, not six. The borrower defaulted at month nine. The lender, which was me, called the guarantee at month ten. The borrower had signed it without reading page four, which had a confession of judgment clause that his state still allows. I did not need a court date. I filed the confession, got judgment the same week, and started collections before he even had counsel retained. Six months became eleven because the contractor walked in month three, and nobody had read the force majeure language in the construction agreement closely enough to know it would not cover that. The guarantee language and the confession clause were both in plain English. His attorney reviewed the note but apparently stopped before the rider. I still think about what the outcome looks like if he had paid someone to read the whole document, rider included, before he signed. Probably cheaper than what he paid me.
