The New York Court of Appeals issued a long-awaited decision today in a case that has significant implications for commercial lease good guy guaranties. Typically, a good guy guaranty provides for a release of the guarantor upon surrender of the premises – often after a notice period – and payment of all rent and additional rent up through the surrender date. The problem arose when a lease required any surrender to be in writing and signed and accepted by the landlord. Lower court decisions incorporated that lease provision into the guaranty and as a result if the landlord did not accept the surrender, the guarantor was not released and remained liable under the guaranty. That all changed by the decision issued today in 1995 CAM LLC v. West Side Advisors, LLC, 2025 NY Slip Op 05782, with an opinion written by Court of Appeals Chief Judge Rowan D. Wilson. The court ruled that tethering the guarantor’s liability to the landlord’s acceptance of surrender “would rent most of the language in the guaranty superfluous.” All of the language in the guaranty, including the notice provision, demonstrated that the parties’ intended the surrender to be unilateral and not dependent upon landlord acceptance. Thus, so long as the guarantor complied with the obligations for release as written in the guaranty, the guarantor would be released without a signed or accepted surrender. Note that if the guaranty on its face does specifically require a written or signed surrender, that will still be enforced.
