Reading a personal guarantee on transactional funding meant to live for six hours
A representative term sheet from a transactional funder: funded amount 214,000, flat fee 4,200, advance wired the morning of closing, repaid from the resale at 249,000 the same afternoon. Two hard money quotes on the C side, buyer has picked one, approval letter in hand. Three clauses are worth reading closely on paper like this. First, an unconditional personal guarantee from the borrowing entity's members that survives repayment for twelve months, typically justified as covering title claims discovered later. On a six hour loan with repayment already committed, a survival period that long is worth negotiating down or capping. Second, a default rate stated as a daily percentage of the advance beginning the day after funding, often north of a thousand dollars a day on a funding this size, with the flat fee stated as fully earned at wire regardless. A weekend funding slip can turn a few thousand dollars of fee into several thousand more of default interest before Monday. Third, a cross indemnity holding the funder harmless for any title defect arising from the A to B transfer, including defects that existed before the buyer's own contract, effectively pushing all title risk onto the borrower for a transaction the funder never examined. A reasonable counter is that the owner's title policy sits between the parties and that risk, and that any indemnity should be capped at the advance amount. Whether any of this is negotiable at this size varies by funder. Some hand out standard paper to everyone and treat every markup as a non-starter; others will adjust the guarantee survival period or cap the indemnity for a borrower with a track record. A twelve month survival clause is more often leftover boilerplate than a deliberate risk decision, but it is worth confirming rather than assuming.
