Guaranteeing a lease: what you owe after the tenant is gone.

A commercial lease guaranty in New York is enforced as written. If yours guarantees payment, the landlord can sue you first, skip the tenant, and skip re-renting the space. What you owe after the tenant is gone turns on four documents: the lease, the guaranty, whatever ended the tenancy, and the landlord’s notices.

Does a lease guaranty make me liable before the landlord sues the tenant?

Usually yes. A guaranty of payment makes you liable when the tenant defaults, unless the guaranty itself requires notice or demand first. The landlord need not sue the tenant, take a judgment, or try to collect elsewhere. A guaranty of collection is different: it puts you second in line.

New York draws this line by intent, not by magic words. A guarantor’s liability is secondary in that it depends on the tenant’s default. But where the instrument promises full and prompt payment on default, the claim against the guarantor accrues when the tenant fails to pay.

Law: General Phoenix Corp. v. Cabot, 300 N.Y. 87, 93, 95 (1949).

Most commercial guaranties are guaranties of payment. Read yours for “absolute,” “unconditional,” “primary obligor,” and “without requiring resort to the Tenant.” Those phrases end the sequencing argument.

You cannot force the landlord’s hand by demanding suit against the tenant. Unless the parties agreed otherwise in writing, a creditor’s failure or refusal to bring an action against the principal debtor after a demand by the surety does not discharge the surety.

Law: General Obligations Law Section 15-701.

Can the landlord make me pay all the remaining rent at once?

If the lease has an acceleration clause and the guaranty reaches it, yes. New York enforces commercial acceleration clauses, and acceleration is not automatically a penalty. The constraint is proportion. An accelerated demand grossly disproportionate to the landlord’s actual loss is a penalty, and penalties are not enforced.

The Court of Appeals upheld acceleration where the clause secured rent as a condition of continued possession. Absent fraud, exploitative overreaching, or unconscionable conduct, equity will not relieve the tenant from it. The same decision flagged the opposite case: a clause accelerating on breach of any term, however trivial, is likely an unconscionable penalty.

Law: Fifty States Management Corp. v. Pioneer Auto Parks, Inc., 46 N.Y.2d 573 (1979).

Then the harder question: the landlord terminates, accelerates, and holds the space. The Court of Appeals held an acceleration clause is not invalid merely because the lease ended and the tenant is out of possession. But the tenant and guarantor were entitled at the damages hearing to show that the undiscounted sum was grossly disproportionate to actual loss.

Law: 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Assn., Inc., 24 N.Y.3d 528 (2014).

Does the landlord have to re-rent the space before collecting from me?

No. In a commercial lease, a New York landlord has no duty to mitigate after the tenant abandons the premises. The rule is contractual, so read the lease: it can impose reletting obligations the common law does not. Residential leases are governed by a different, statutory rule.

The tenant in the controlling case vacated a commercial office building, was evicted in a nonpayment proceeding, then argued the landlord deliberately declined to show the space. The Court of Appeals rejected the defense. The lease let the landlord do nothing and collect rent as it came due.

Law: Holy Properties Ltd., L.P. v. Kenneth Cole Productions, Inc., 87 N.Y.2d 130 (1995).

One qualification matters. For premises occupied as a dwelling, the landlord must take reasonable and customary steps to relet, and that duty cannot be waived. The commercial rule survives because the lease allocates the risk.

Law: Real Property Law Section 227-e.

Hold that next to the acceleration rule. A landlord who sits on empty space and sues month by month owes you nothing in mitigation. A landlord who accelerates the whole term and keeps the space has invited a proportionality attack.

No duty to mitigate is not the same as no credit for what the landlord actually collected.

What are holdover damages, and can a guarantor be charged with them?

Holdover damages are what an occupant owes for staying past the end of the tenancy. Three sources create them: a statute, the lease’s holdover clause, and a claim for use and occupation. Whether you pay any of them depends on the words of your guaranty.

The statutory piece is narrow and runs on the tenant’s own notice. Where a tenant gives notice of intention to quit and then fails to deliver possession at the stated time, the tenant pays double rent while possession continues. A landlord’s notice does not trigger it.

Law: Real Property Law Section 229.

After termination, the landlord’s claim against whoever remains is for reasonable compensation for use and occupation. It runs against the occupant, and reaches you only if your guaranty says so.

Law: Real Property Law Section 220.

Most holdover exposure comes from the lease clause, often one and a half or two times base rent. Such a clause is tested as liquidated damages, but courts have enforced commercial multipliers, so calling one a penalty is an uphill argument.

The guaranty question is separate and often better. A guaranty is construed strictly and is not extended beyond its terms. If yours promises “Fixed Rent and Additional Rent payable under the Lease,” and the claim is for use and occupancy after termination, the landlord wants you to pay something the guaranty may not name. Strict construction will not, however, save you from a guaranty that expressly covers post-termination damages.

Law: Page v. Krekey, 137 N.Y. 307, 314 (1893).

How do I attack a holdover or acceleration figure as a penalty?

With evidence, not adjectives. A liquidated damages clause holds if the sum was a reasonable estimate of probable loss and actual loss was hard to measure when the lease was signed. Both are judged as of signing. You carry the burden of proving that the clause is a penalty.

Law: Truck Rent-A-Center, Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420, 425 (1977); JMD Holding Corp. v. Congress Financial Corp., 4 N.Y.3d 373, 380 (2005).

What that burden looks like:

• The landlord’s loss month by month after the tenant left.
• What a replacement tenant paid, and when.
• Whether the accelerated sum was discounted to present value.
• Whether the landlord holds, markets, or has relet the space.
• Whether the clause fires on any breach, however small.
• What the parties could foresee at signing, the frame the court applies.

Win that fight and the clause drops out. Recovery is limited to actual damages the landlord proves. That is not a dismissal. It is a different number, one the landlord must earn with evidence.

Law: 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Assn., Inc., 24 N.Y.3d 528, 535-536 (2014).

The tenant handed back the keys. Does my guaranty end there?

Not by itself. A surrender cuts off future obligations only if the landlord accepted it, expressly in writing or by conduct so inconsistent with the tenancy that the lease is treated as ended. Re-entry under a right the lease grants is usually not acceptance.

Law: Riverside Research Institute v. KMGA, Inc., 68 N.Y.2d 689, 691-692 (1986).

Conduct proves it. Courts look at re-entry, changed locks, disposal of the tenant’s property, marketing in the landlord’s own name, and reletting on new terms. One act rarely does it. A pattern does. Where the lease authorizes reletting for the tenant’s account, doing that is ordinarily not acceptance.

The consequence matters more than the doctrine. Where a surrender by operation of law occurred and was accepted, the tenant is not liable for damages accruing after that date. If the tenant owes nothing for a period, a guarantor owes nothing either. The guaranty is derivative unless it says otherwise.

Law: 4400 Equities, Inc. v. Dhinsa, 52 A.D.3d 654 (2d Dep’t 2008), citing Underhill v. Collins, 132 N.Y. 269, 271 (1892).

Now the counterweight. Commercial leases routinely contain survival clauses continuing the damages obligation after re-entry, termination, and reletting. Those clauses are enforced. That is why a landlord who retook the space can still sue for the rent.

The keys are evidence. The survival clause is the rule. Read the clause before you argue the keys.

If your guaranty caps exposure at a surrender date on stated conditions, the conditions are the whole case. Written notice, vacant possession, keys returned, rent current. Miss one and the cap does not close.

The landlord changed the lease without asking me. Does that discharge the guaranty?

Sometimes. An obligation cannot be altered without the consent of the party who assumed it, so a material modification made without your consent can relieve you. Commercial guaranties are drafted to defeat that rule. If yours consents in advance to amendments, extensions, and renewals, the defense is gone.

Law: Bier Pension Plan Trust v. Estate of Schneierson, 74 N.Y.2d 312, 315 (1989).

So look for the consent-to-modification clause. Where the guaranty says the guarantor stays bound notwithstanding amendments, extensions, and renewals, the guarantor is bound to the obligations as modified.

Law: American Bank & Trust Co. v. Koplik, 87 A.D.2d 351, 353 (1st Dep’t 1982).

Waivers are taken seriously here. Where a guaranty recites that it is absolute and unconditional irrespective of any circumstance that might otherwise be a defense, the guarantor cannot defend on fraud in the inducement resting on oral promises the recitals contradict. That does not erase every defense. Payment, scope, and amount remain open.

Law: Citibank, N.A. v. Plapinger, 66 N.Y.2d 90 (1985).

Are there defenses that come from statute rather than from my documents?

A few, and they do not depend on how the guaranty is drafted. The promise must be in a signed writing to be enforceable at all. Separately, a New York City law bars enforcement of some personal guaranties of commercial lease obligations that came due during a defined pandemic closure window.

A special promise to answer for the debt of another is void unless in writing and subscribed by the party to be charged. An oral assurance is not a guaranty, and neither is an unsigned draft in an email chain.

Law: General Obligations Law Section 5-701(a)(2).

The city law is narrower than it sounds. It reaches guaranties by natural persons, for tenants whose businesses were subject to specified pandemic closure orders, where the obligation came due inside a statutory window beginning March 7, 2020. It has drawn federal constitutional litigation. Confirm the current text, the window’s end date, and the covered-business criteria before relying on it.

Law: New York City Administrative Code Section 22-1005.

Why did the landlord file a motion instead of a complaint?

Because a plaintiff suing on an instrument for the payment of money only can serve a motion for summary judgment in place of a complaint. You oppose on the return date set in the moving papers rather than answer at leisure. The vehicle is fast, and it is beatable.

Law: CPLR 3213.

The test is strict. The document qualifies only if a prima facie case is made out by the instrument itself and the failure to make the payments its terms call for.

Law: Weissman v. Sinorm Deli, Inc., 88 N.Y.2d 437, 443-444 (1996).

Apply that to a lease guaranty, and be realistic. Courts regularly allow the device on an unconditional guaranty even though the lease supplies the arithmetic, and a court can grant liability and send the amount to a hearing. So aim narrowly. If the demand is built from escalations, expense reconciliations, a holdover multiplier, and an accelerated balance, attack the amount in specifics, with the landlord’s own ledger.

What should you do first?

Gather documents before you argue. You are not fighting about whether you signed. You are fighting about what the signature reached and what the number should be. Both questions are documentary, and both are usually answered by paper already in your files.

• Find the executed guaranty, not the draft. Read the first operative sentence. Payment or collection, capped or unlimited, surviving amendments or not?
• Pull the lease and every amendment, extension, and side letter. Line those dates against your signing date.
• Fix the date the tenant left, the date the landlord took the keys or changed the locks, and the date any new tenant moved in. Those dates bound your exposure.
• Check whether any part of the default period falls inside the city guaranty law’s pandemic window.
• Save the emails and texts about turning over the space. Surrender is proved by conduct.
• Demand the damages breakdown and match every line item to words in the guaranty. Anything unnamed is a target.
• Calendar the response date the day you are served. If the landlord used the summary vehicle, opposition is your only pleading.

Do this before you talk to the landlord’s counsel. Your position is set by documents that already exist. Read them first, then negotiate.