Bryan Mohler, left, and Rachel Shaw of Pryor Cashman. Courtesy photos Good Guy Guarantees: How One Word May Expand the Liability of Individual Guarantors
In December 2022, the First Department issued a decision in 122 East 42nd Street LLC v. Joseph Scharf and Sarah Gotlib that caught the leasing world off guard as it relates to so-called "Good Guy" guarantees.
April 16, 2024 at 10:00 AM
9 minute read
Landlord Tenant Law
In December 2022, the First Department issued a decision that caught the leasing world off guard as it relates to so-called "Good Guy" guarantees. In 122 East 42nd Street LLC v. Joseph Scharf and Sarah Gotlib, App. Div. Case No. 2022-04777, the court unanimously affirmed a Supreme Court decision which held that the personal liability of individual guarantors—under what the parties' thought was a classic "Good Guy" Guaranty—could not be extinguished unless the tenant, prior to its surrender of the premises, obtained landlord's written consent. That holding, now on appeal to the New York Court of Appeals, is being watched closely by industry practitioners concerned that, if affirmed, it may convert existing good guy guarantees into unconditional guarantees.
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