Personal and “good guy” guarantees: what you risk when you sign a New York lease

Key points

• A newly formed US entity has no credit history, so landlords look for a guarantor, a larger deposit or both.

• A good guy guarantee releases the guarantor if the tenant surrenders the space properly. The tenant entity itself usually remains liable under the lease.

• In 2025, New York’s Court of Appeals enforced a good guy guaranty as written: if the guaranty does not require landlord acceptance of the surrender, the landlord’s acceptance is not needed.

• Notice periods, surrender conditions and cross-references to the lease are where the risk sits.

Full guarantee vs. good guy guarantee

With a full guarantee, the guarantor is responsible for the tenant’s obligations for the whole term, or up to an agreed cap. If the business closes in year two of a ten-year lease, the landlord can pursue the guarantor for what the tenant owes.

A good guy guarantee is a limited guarantee common in New York City. The guarantor stays liable while the tenant occupies the space. If the tenant gives the required notice, pays rent and other charges through the surrender date and hands the premises back in the required condition, the guarantor is released from further liability. If the tenant stays in the space after defaulting, the guarantor’s liability continues.

One point is often misunderstood. The good guy guarantee releases the guarantor, not the tenant. As Frankfurt Kurnit notes, the lease itself continues, so the tenant entity can still be liable for the remaining term.

The 2025 Court of Appeals ruling

In the case 1995 CAM LLC v. West Side Advisors, LLC, the question was whether the guarantor’s liability ends when the tenant surrenders the space or only when the landlord accepts the surrender. The Court enforced the guaranty as written. Because that guaranty did not require landlord acceptance, the guarantor’s obligations ended once the tenant vacated in accordance with its terms, even though the landlord never accepted the surrender in writing. The practical lesson is that the drafting controls. Language that incorporates all lease terms by reference may bring a landlord consent requirement back in.

What foreign tenants should negotiate

• Who guarantees. Consider whether the parent company can guarantee instead of an individual founder, and what that means for the group’s balance sheet.

• Notice period. The guarantor stays liable until the surrender date, so a shorter notice period means less exposure. Check how notice must be delivered; an email may not satisfy a clause that requires courier or certified mail.

• Self-contained surrender conditions. Write the conditions for release into the guaranty itself, and avoid wording that requires the landlord’s consent.

• Caps and reductions. For a full guarantee, ask for a cap, or for the amount to reduce after a period of timely payment.

• Raise it early. Negotiate the guarantee in the letter of intent, before spending on full lease review.

The pandemic-era Guaranty Law

New York City passed a law limiting personal liability under commercial lease guarantees for obligations incurred between March 7, 2020, and June 30, 2021. In March 2023, the US District Court for the Southern District of New York held it unconstitutional in Melendez v. City of New York. It should not be relied on for current leases.

Practical steps

1. Decide early which entity or person can offer a guarantee, and what size of deposit is acceptable instead.

2. Ask your attorney to review the guaranty alongside the lease, not after it.

3. If you ever need to exit, follow the surrender procedure exactly and keep records of notice, rent paid, vacating and return of keys.

How Devolus can help

Devolus helps foreign brands prepare the financial package landlords expect from a new US tenant and works alongside their counsel during lease negotiation. The Readiness Check is a good first step, or you can write to us.