If you're a dealership owner and Westlake Financial or Westlake Flooring Services is asking you to personally guarantee a floorplan line of credit or master agreement, that signature is worth slowing down for. If you've already signed and you're now wondering what you actually agreed to, this is worth reading too. It will tell you exactly where your exposure sits.
What "Personal Guarantor" Actually Means
Forming an LLC or corporation is supposed to shield your personal assets from your business's liabilities. A personal guaranty punches a hole directly through that shield. For this one obligation, you agree to be personally responsible for the debt if the business can't or doesn't pay.
That typically means:
- Unlimited personal exposure, unless the guaranty is specifically capped in dollar amount or duration.
- Joint and several liability if there are multiple guarantors — Westlake can pursue any one guarantor for the full balance, not just their proportional share, and let that guarantor sort out contribution from the others later.
- Liability that survives the business. If the dealership closes, files bankruptcy, or is sold, your personal guaranty generally does not disappear with it.
How These Guaranties Are Usually Structured
Floorplan and dealer financing from Westlake typically runs through a Master Loan and Security Agreement (governing the credit line and the vehicles securing it) paired with a separate or embedded personal guaranty. The guaranty is what allows Westlake to name you, not just your dealership, as a defendant if the line goes into default.
The Waivers You're Signing Away
This is the part most owners skim past. California's suretyship statutes (Civil Code §§ 2787–2856) give guarantors a set of built-in protections — for example, the right to require a lender to exhaust its remedies against the borrower or collateral first, and rights of subrogation and reimbursement if you end up paying the debt.
Commercial guaranties, including most dealer-financing guaranties, almost always contain broad, explicit waivers of these statutory protections. In plain terms, you're typically agreeing that Westlake can come after you personally, immediately, without first pursuing the dealership or liquidating the vehicle inventory, and that certain defenses tied to how they handle the collateral won't be available to you. California law allows these waivers when properly drafted (Civil Code § 2856), and lenders almost universally require them.
None of this means the guaranty is unfair or unenforceable, it's standard in commercial lending. It does mean you should know exactly what you're waiving before you sign, not after you're served.
Questions to Ask Before You Sign
If you're being asked to sign a new Westlake guaranty (or renew an existing one), consider negotiating or at least clarifying:
- Is the guaranty capped? A dollar cap or a cap tied to a specific percentage of the outstanding line is far different from an unlimited guaranty.
- Is it a "continuing" guaranty? These typically cover all future advances under the line, not just the current balance, meaning your exposure grows as your floorplan usage grows.
- Is there a release or sunset provision? Some guaranties can be negotiated to terminate after a period of good standing, a change in ownership, or a reduction in the credit line.
- What are the audit and curtailment terms? Floorplan defaults are frequently triggered by missed curtailment payments or failed inventory audits. Understand exactly what triggers a default before you're relying on it.
- What happens to jointly guaranteed debt if you exit the business or sell your ownership stake? Get this in writing; a guaranty doesn't automatically end just because you sold your shares.
- Does the agreement require notice before Westlake can accelerate the debt or liquidate collateral? Notice-and-cure periods, where available, buy you time to fix a problem before it becomes a lawsuit.
If You've Already Signed
Most owners in this position aren't reading this before signing, they're trying to understand what they're already on the hook for. A few things worth doing now, before there's a dispute:
- Pull the actual signed guaranty, not just the master agreement. The guaranty's specific language controls your exposure.
- Confirm whether it's capped, joint, and/or continuing.
- Understand your notice and cure rights under the agreement if a default is looming.
- Track your dealership's compliance with audit, insurance, and curtailment terms; most defaults are preventable with early attention.
If a default has already happened or you've been served with a lawsuit, our companion article, Sued by Westlake Financial? What California Business Owners Need to Know, walks through response deadlines and possible defenses.
How LawPLA Can Help
We represent business owners all across California, including auto dealers and other business owners with floorplan or asset-based financing, in reviewing, negotiating, and, when necessary, litigating personal guaranties. Whether you're weighing whether to sign a new Westlake agreement or trying to understand your exposure under one you already signed, we can review the actual contract language and tell you plainly where you stand.
Call the Law Offices of Parag L. Amin, P.C. at (213) 293-7881 for a confidential consultation, or fill out the Contact Form below.
Frequently Asked Questions
Can I negotiate the terms of a Westlake Financial personal guaranty before signing?
Often, yes. Caps, sunset provisions, and notice requirements are all points lenders will sometimes negotiate, particularly for established dealers with strong payment history. It's easier to negotiate before you sign than after.
Does a personal guaranty end if I sell my dealership or ownership interest?
Not automatically. Unless the guaranty or a separate release specifically terminates your obligation upon sale, you may remain personally liable for the line even after you're no longer an owner.
If there are multiple guarantors, am I only responsible for my share?
Usually no. Most commercial guaranties impose joint and several liability, meaning the lender can pursue any single guarantor for the entire balance.
I already signed a Westlake Flooring guaranty and I'm worried about my exposure — what should I do?
Have an attorney review the actual signed document (not just your memory of the terms) to confirm whether it's capped, continuing, and what default triggers apply, ideally before any default occurs.
As a guarantor, am I on the hook for a deficiency balance after collateral is sold?
Generally, yes, a continuing guaranty typically covers whatever balance remains after collateral is liquidated, not just the original advance. This is one of the biggest reasons the cap and scope language in your guaranty matters so much.
How much does it cost to have an attorney review a Westlake Financial guaranty?
It depends on whether you need a pre-signing review, an exposure assessment on an existing guaranty, or active litigation defense. A short consultation is usually the fastest way to get a clear cost estimate for your specific situation.
This article is for general informational purposes only and does not constitute legal advice. Guaranty language varies significantly between agreements, and your specific obligations depend on the exact document you signed. Contact a licensed California attorney to review your contract.