The COVID-19 pandemic has elicited vigorous legislative responses at the federal, state and local levels. Among this legislation is a New York City law enacted on May 26, 2020 which purports to temporarily suspend personal guaranty provisions contained in commercial leases. However, questions may exist as to whether the law is consistent with the United States and New York Constitutions. And, even if it passes constitutional muster, the law appears to have been drafted poorly and with a limited understanding of the issues it aims to address.
The new law adds §22-1005 to the New York City Administrative Code (AC), which provides for the suspension of certain contractual obligations between March 7 and Sept. 30, 2020:
Personal liability provisions in commercial leases. A provision in a commercial lease or other rental agreement involving real property located within the city that provides for one or more natural persons who are not the tenant under such agreement to become, upon the occurrence of a default or other event, wholly or partially personally liable for payment of rent, utility expenses or taxes owed by the tenant under such agreement, or fees and charges relating to routine building maintenance owed by the tenant under such agreement, shall not be enforceable against such natural persons…
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