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Expanding the Scope of Good Guy Guarantees in NY

By Stewart E. Sterk
May 02, 2017

Good Guy Guarantees are designed to ensure that defaulting commercial tenants leave the premises promptly, avoiding loss of rental income to landlords. The guarantee provides an incentive for the guarantor (usually one of the tenant's principals) to make sure the tenant leaves promptly, because the guarantor remains on the hook for rent until tenant vacates the premises. However, in Bri Jen Realty Corp. v. Altman, NYLJ 1/13/17, p. 26., col. 2, New York's Second Appellate Department construed a Good Guy Guarantee to hold a guarantor liable for rent for 11 months after the tenant surrendered the premises. Bri Jen counsels caution in drafting future “Good Guy” Guarantees.

The Bri Jen Case

Landlord and MK Warehouse, LLC, had entered into a 10-year commercial lease to begin on Feb. 1, 2010. The lease provided that the annual rent was due in advance, “adjusting on the anniversary date of the commencement of the lease.” A rider to the lease provided that the annual rent was due in advance, but provided that for the convenience of the tenant, it could make payments in monthly installments on the first day of each month.

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