October 22, 2025
One of my favorite conversation pieces at real-estate cocktail parties and lunches has been to explain how, with some careful, but subtle, drafting, a commercial landlord’s attorney could effectively convert a good-guy guaranty into a full-recourse guaranty.
Yes, I’m a real-estate-law nerd.
But after yesterday’s decision of the New York Court of Appeals in 1995 CAM LLC v. West Side Advisors, LLC, I’ll have to come up with other talking points to make myself appear cool and relevant.
Before this decision, the trick was to have the good-guy guaranty require that, to exercise the “good-guy” right under the guaranty, the tenant’s surrender be done “as otherwise required by the Lease” or “pursuant to the terms of the Lease.”
Though seemingly innocent, the First Department has repeatedly held (here, here, and here) that this language incorporates all the terms of the lease, including section 25 of the standard REBNY lease—which states that no agreement to accept the tenant’s surrender of the premises will be valid “unless in writing signed by Owner.”
So according to the First Department, the guarantor could exercise his or her “good-guy” right and be off the hook for future liability only if the landlord accepted the tenant’s surrender in a signed writing. And surprise, surprise—most landlords wouldn’t voluntarily accept a surrender when the tenant is walking away before the end of its lease.
Of course, this interpretation of the good-guy guaranty’s requirements reads out the “good guy” portion of the guaranty. If the guarantor’s release of future liability is contingent on the landlord’s acceptance of the tenant’s surrender, then isn’t this good-guy guaranty really just a full-recourse guaranty? Perhaps. But the First Department repeatedly doubled down on this rule. And this nuance in the law gave savvy leasing lawyers on both sides of a deal the opportunity to earn their fee.
But on Tuesday, the Court of Appeals weighed in, holding that a requirement in a good-guy guaranty to surrender the premises “pursuant to the terms of the Lease” does not require the landlord to accept the tenant’s surrender. According to the Court, if the landlord’s acceptance of a surrender were required, then “all of the conditional language in the guaranty would be superfluous.” And so, the Court held, the guarantor’s liability ended “when the tenant vacated the premises,” and this release from future liability was “not conditioned on the landlord’s acceptance of that surrender.”
Judge Madeline Singas (a 2021 Cuomo appointee) dissented, arguing that the majority’s interpretation ignores the specific language of the guaranty and the lease “under the guise of resolving surplusage.” Judge Singas also predicted that the Court’s holding would be “cabined to the distinct and unusual agreement now before us.” While landlord’s attorneys like myself might hope so, I don’t think this is right—since the language in the good-guy guaranty at issue here is fairly common, and it’s unlikely that, after this decision, anything less than an explicit landlord-acceptance requirement in the guaranty itself would suffice.
This decision is a win for tenants’ attorneys—but really only the bad ones. The good ones already know not to include language in the good-guy guaranty that incorporates unspecified provisions of the lease.
So congrats to the winners in this decision. And for the rest of us, we’ll just have to come up with other fodder for fancy parties and business lunches.
*Joshua Wurtzel is a partner at Schlam Stone & Dolan and heads up the firm’s real-estate litigation group.