Court of Appeals Held that “Good Guy Guarantor” Finished First

• Posted on: Oct 24 2025

By: Jonathan H. Freiberger

Today’s article addresses 1995 Cam LLC v. West Side Advisors, LLC, a case decided on October 21, 2025, by the New York Court of Appeals. In 1995 Cam, the Court held that the guaranty executed by guarantor was a “good guy” guaranty and, therefore, liability under the subject commercial lease ended with the tenant’s surrender of possession of the premises and not with the landlord’s acceptance of the surrender.

By way of background, a “good guy” guaranty is a type of guaranty frequently seen in conjunction with commercial leases. Such guarantees are typically executed by one or more owners of the tenant entity. “Under a standard ‘good guy guaranty,’ the guarantor is obligated to guarantee the lease payments until the tenant vacates and surrenders possession. This guaranty is so named because it is intended to induce the tenant to be a ‘good guy’ and leave the premises without undergoing the expense of eviction or removal of the tenant’s property.” 1995 Cam at Note 1 (citations and internal quotation marks omitted). Thus, the tenant, but not the “good guy” guarantor would be responsible for all rent due under the lease subsequent to the surrender.

In 1995 Cam, the landlord and tenant entered into a commercial lease for office space in Manhattan. The initial lease was a standard form Real Estate Board of New York, Inc. (“REBNY”) lease with a rider. The lease was subsequently extended to, inter alia, include a limited personal guaranty from one of tenant’s officers, which was not a standard REBNY limited guaranty. Prior to the end of the lease term, tenant stopped paying rent and, on October 28, 2020, sent a letter to landlord advising of its intent to surrender the premises on November 30, 2020. On or about November 30, 2020, tenant vacated the premises and, after a walkthrough, delivered the keys to the premises to the building superintendent.

The landlord commenced an action against tenant and guarantor to recover unpaid rent and expenses accruing both before and after the surrender of the premises. Ultimately, Supreme Court granted summary judgment to landlord. Tenant and guarantor appealed. The First Department affirmed, holding that “because the guaranty requires [tenant]’s surrender ‘pursuant to the terms of the Lease’ [tenant’s] failure to obtain [landlord]’s written acceptance of the surrender of the premises precluded [guarantor’s] avoidance of liability.” (Citations and internal quotation marks omitted.) The Court of Appeals granted leave for guarantor to appeal the judgment against it for post-vacatur damages.

The Court framed the question presented as follows: “whether [guarantor]’s liability ends with [tenant]’s surrender of possession, or with [landlord]’s acceptance of surrender.” The Court’s analysis began with a discussion of general principles of contract construction. It noted that “[a] guaranty is subject to the ordinary principles of contract construction.” (Citations and internal quotation marks omitted.) Further, “[i]t is axiomatic that a contract is to be interpreted so as to give effect to the intention of the parties as expressed in the unequivocal language employed.” (Citations and internal quotation marks omitted.) In addition, “[i]n the absence of any ambiguity, we look solely to the language used by the parties to discern the contract’s meaning.” (Citations and internal quotation marks omitted.) The Court noted that there was no claim of ambiguity with the lease.

Specifically, as to the guaranty, the Court reiterated that such instruments are “to be interpreted in the strictest manner” and that:

[i]mportantly, an interpretation that renders language in the guaranty superfluous is a view unsupportable under standard principles of contract interpretation. Accordingly, particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby. Form should not prevail over substance and a sensible meaning of words should be sought. [Citations, internal quotation marks and brackets omitted.]

The Court then quoted the operative provision of the guaranty:

Guarantor guarantees that he shall pay to owner when due all Tenant’s monetary obligations that have accrued under the terms of the Lease to the date that is the latest date that Tenant and its assigns, licensees and sublessees, if any, and shall have completely vacated and surrendered the Demised Premises to [Landlord] free and clear of any and all subtenants and/or occupants pursuant to the terms of the Lease (which date may be earlier than the stated expiration date in the Lease.) Tenant shall provide [Landlord] with not less than thirty (30) days prior notice of the date that it will be vacating and surrendering free and clear of any and all subtenants and other occupants. [Emphasis supplied; internal quotation marks, ellipses, brackets and footnote (noting that the “freely negotiated” guaranty is not a “standard” REBNY guaranty) omitted.]

The Court recognized that while “surrender” is not defined in the guaranty, the REBNY lease contained two relevant provisions. The first (titled “End of Term”) provides that:

Upon the expiration or other termination of the term of this Lease, Tenant shall quit and surrender to [Landlord] the Demised Premises, broom clean, in good order and condition, ordinary wear and damages which Tenant is not required to repair as provided elsewhere in this Lease excepted, and Tenant shall remove all its property.

The second provision (titled “No Waiver”) provides that:

No act or thing done by [Landlord] or [Landlord]’s agents during the term hereby demised shall be deemed an acceptance of a surrender of said premises, and no agreement to accept such surrender shall be valid unless in writing signed by [Landlord]. No employee of [Landlord] or [Landlord]’s agent shall have any power to accept the keys of said premises prior to the termination of the Lease and the delivery of keys to any such agent or employee shall not operate as a termination of the Lease or a surrender of the premises.

In its opinion, the Court disagreed with the First Department’s reliance on the “No Waiver” provision to define “surrender”, which required a landlord’s acceptance. Doing so, according to the Court of Appeals, would “render most of the language in the guaranty superfluous.” In particular, the Court stated that the “language in the guaranty after ‘that have accrued under the terms of the Lease’ conditions [guarantor]’s liability on [landlord]’s actions. If [guarantor]’s liability were intended to be fully coterminous with that of [landlord]—that is, a full guaranty—all of the conditional language in the guaranty would be superfluous.”

Conversely, the court found that the language in the “End of Term” provision of the REBNY lease would be more appropriately relied upon to define “surrender.” The Court stated:

Relatedly, [the “End of Term” provision] of the REBNY Lease requires that at lease end, the tenant deliver the Premises vacant and broom clean. If the guaranty continued until the end of the Lease, there would be no need to reiterate the requirement that the Premises be delivered “completely vacant” in the guaranty. Inclusion of the “completely vacant” requirement in the guaranty becomes meaningful only if the guarantor’s liability can end before the Lease ends, so that even when [the “End of Term” provision]’s “vacant and broom clean” requirement is not yet in effect (because the Lease has not ended), the “good guy” guaranty requires the premises be completely vacant at the earlier time as a condition of releasing the guarantor. [Footnote omitted.]

The Court further found that because:

the Lease does not require that the tenant give any notice to vacate at the end of the lease term; the inclusion of the 30–day notice provision in the guaranty makes sense only if the guaranty can terminate before the end of the lease, leaving the tenant, but not the guarantor, liable for post-surrender rent. Indeed, reading “surrender” in the guaranty to include acceptance would render the 30–day notice an impossibility. If, as [landlord] contends, “surrender” in the guaranty requires its acceptance, the notice requirement would require [tenant] to provide notice 30 days before [landlord] accepts the surrender, which would be both impossible and nonsensical. [Citations omitted.]

Finally, the Court noted that the parties could have easily crafted a guaranty that was expressly a “good guy” guaranty without the need for the court to “resort to rules of construction regarding superfluity or canons that aid in determining the parties’ intent.”

It should be noted that Justice Singas wrote a lengthy dissenting opinion in which one other justice concurred.

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

Tagged with: Commercial Leases, Commercial Litigation, Court Of Appeals, Good Guy Guaranty