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A letter of credit is a negotiable instrument typically offered by banks to guarantee payment. In commercial real estate transactions, a tenant can obtain a letter of credit and offer it to the landlord as security in the event of a default.

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Terms And Purposes Of A Commercial Guaranty A guaranty is an agreement made by a third party, whether a person, trust or a business entity, to pay and/or perform the obligations of a debtor for the satisfaction of a debt owed to a creditor upon the occurrence of an event, typically a default by the debtor, under the original loan agreement.

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