BY JOHN KIRITSIS, ESQ., CPA, MBA, MS, JD, LL.M
A “Good Guy” guaranty is a common provision in commercial leases, particularly in New York City (NYC). It is a type of personal guaranty that provides certain protections to both landlords and tenants in the context of commercial lease agreements. Here’s an overview of “Good Guy” guaranty clauses in NYC commercial leases:
- Purpose of “Good Guy” Guaranty:
The primary purpose of a “Good Guy” guaranty is to mitigate potential risks for both landlords and tenants in the event of a tenant’s default or early termination of the lease. It is designed to encourage a tenant to vacate the premises in a responsible manner and to protect the landlord from incurring additional costs associated with eviction.
- Key Elements of the “Good Guy” Guaranty:
A typical “Good Guy” guaranty clause includes the following key elements:
The guarantor (usually an individual or an entity) guarantees the tenant’s performance of lease obligations.
The guaranty is limited to the period of time the tenant actually occupies the premises.
The guarantor will be released from further liability if the tenant surrenders the premises in good condition and pays all outstanding rent up to the date of surrender.
- Surrender of Premises:
The “Good Guy” guaranty is often triggered when the tenant surrenders the premises and provides vacant possession to the landlord. If the tenant surrenders the premises and fulfills its obligations under the lease, the guarantor is released from further liability.
- Limitation on Liability:
Unlike a traditional guaranty that may hold the guarantor liable for the full extent of the lease obligations, the “Good Guy” guaranty limits the guarantor’s liability to unpaid rent and damages up to the date of the tenant’s surrender.
- Benefit for Tenants:
The “Good Guy” guaranty can benefit tenants by allowing them to avoid extended liability beyond their actual occupancy period. It also incentivizes tenants to exit the premises responsibly to avoid legal action or credit damage.
- Benefit for Landlords:
Landlords benefit from the “Good Guy” guaranty because it encourages tenants to fulfill their lease obligations, vacate the premises without causing excessive damage, and minimize the risk of eviction-related expenses.
- Negotiating Terms:
The terms of the “Good Guy” guaranty can be negotiated between the parties. This includes the specific conditions under which the guarantor will be released from further liability and any potential exceptions or carve-outs.
- Legal Review:
Both landlords and tenants should consult legal professionals experienced in commercial real estate law to ensure that the “Good Guy” guaranty clause is drafted accurately and fairly represents their interests.
- Local Jurisdiction:
While “Good Guy” guaranties are common in NYC, the specific legal requirements and enforceability may vary based on local laws and regulations.
“Good Guy” guaranties are a strategic tool that landlords and tenants can use to balance their respective interests in commercial lease agreements. When including such a clause in a commercial lease, it’s crucial to work with legal professionals to ensure that the terms are clear, enforceable, and aligned with the parties’ intentions.
Citations, References and Potentially Useful Resources for Further Information:
New York State Constitution
Federal Securities Regulation
New York State Martin Act
New York Condominium Act
New York State Security Regulations
New York Business Corporation Law
New York Limited Liability Company Law
New York Uniform Partnership Act
Federal Internal Revenue Code
New York State Tax Laws, Rules & Regulations
New York City Tax Laws, Rules & Regulations
Winston Churchill Owners, Inc. v. Regents Real Estate Associates
Board of Managers of the Park Regis Condominium v. Park Regis Owners Corp.
Park Sutton Condominium v. 447 E. 57th St. LLC
28 E. 10th Street Corp. v. Veras
Riverside Syndicate, Inc. v. Munroe
Essex House Condominium v. Marks
The Parc Vendome Condominium v. Atkinson
54-56 Meserole Street Owners Corp. v. Rossi
The Beekman Regent Condominium v. Bottiglieri
Chelsea 19th LLC v. West 19th Street Realty LLC
New York Department of Finance
New York City Department of Buildings
New York City Bar Association
New York State Bar Association
Call 212 922 0005. Kiritsis Law Group.
Manhattan Office: 633 Third Avenue, New York, NY 10017. Phone# 212 922 0005.
New Jersey Office: 7309 Ventnor Avenue, Ventnor, NJ 08406. Phone# 212 922 0005.
Brooklyn Office: 6902 11th Avenue, Brooklyn, NY 11228. Phone# 212 922 0005.
Feel free to call us at 212-922-0005 for a free, brief and confidential consultation.
Whether buying real estate, having years of un-filed tax returns, have an immigration question, considering to start a business, faced with a commercial/business dispute or thinking about getting a prenuptial agreement — Our law firm is willing, able and ready to assist you. Call us at 212 922 0005.
We represent businesses and individuals throughout the 5 boroughs of New York City and most of New Jersey.
For a free, brief initial phone consultation with an attorney, call us today at 212 922 0005.
Our law firm provides a full range of legal services, within the following practice areas:
Tax & Accounting Services
Business/Commercial Litigation & Disputes
The materials available through this website and any other websites owned by John Kiritsis (individually and collectively, the “Website”) are the property of John Kiritsis and his entities, and are protected by copyright, trademark, and other intellectual property laws. You may not use, reproduce, download, store, post, broadcast, transmit, modify, sell, or make available to the public content from the Website without the prior written approval of John Kiritsis. Beware that any unauthorized use of John Kiritsis’ trademarks and copyrighted content for commercial purposes in violation of John Kiritsis’s intellectual property rights, will be vigorously enforced. All other trademarks, service marks and trade names referenced in this site are the property of John Kiritsis.
ANY AND ALL INFORMATION POSTED IN THIS WEBSITE SHALL NOT BE A SUBSTITUTE FOR LEGAL ADVISE BY PROPERLY LICENSED COMPETENT ATTORNEYS. FOR INFORMATIONAL ENTERTAINMENT PURPOSES ONLY. NOT SUBJECTED TO FINALIZED LEGAL EDIT WITH REGARDS TO CONTENT. SITE PRONE TO CONTAINING ERRORS OF STATEMENT OF LAWS, RULES AND/OR REGULATIONS WHERE APPLICABLE.
ATTORNEY ADVERTISING. PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME.
The views expressed by this author are not legally binding or reflective of the author, the author’s firm, the author’s employers, the author’s employees, or any individual and/or organization.