The Good Guy Guarantee in NYC Commercial Leases, Explained

A guide for business owners and landlords negotiating New York City commercial leases. Updated October 14, 2026.

A good guy guarantee is a personal guarantee with a built-in exit. The business owner who signs it is personally responsible for the lease only until the business moves out the right way: with advance notice, rent paid up to the move-out date, and the space handed back empty. After that, the owner is off the hook for the rest of the lease term.

It is one of the most common terms in New York City commercial leases, and it goes by several names: good guy guarantee, good guy guaranty, or good guy clause. Two recent court decisions, in October 2025 and June 2026, changed how it works in practice. This guide explains the clause for business owners who are asked to sign one, and for the landlords who rely on it.

At a glance

It limits personal liability to the time the business occupies the space, not the full lease term.
The exit has conditions. Usually: written notice in advance, rent and other charges paid through the move-out date, the space returned empty and in the required condition, and the keys handed back.
Miss a condition and the exit can fail. The guarantor may then stay liable as rent keeps coming due, potentially through the end of the lease.
Only the guarantor is released. The business itself still owes rent for the rest of the term unless the landlord agrees to end the lease.
New York's highest court sided with guarantors in October 2025. It held that a guarantor's liability ended when the tenant moved out and returned the keys, even though the landlord never accepted the surrender in writing.
The exact wording controls. Two guarantees with the same name can work very differently, so read the guarantee itself, not the label.

How a good guy guarantee works

The clause solves a standoff. A landlord renting to a new or small business usually wants the owner's personal guarantee. But if the business struggles, an owner facing years of personal liability has little reason to leave, and evicting a commercial tenant in New York City can take many months. The good guy guarantee gives both sides a cleaner exit: the landlord gets the space back quickly and in good order, and the owner's personal exposure stops on the day the business leaves.

To use the exit, the business typically has to do four things, in this order:

Give written notice. The guarantee sets how much notice is needed, commonly 90 to 180 days, and how it must be delivered. The business keeps paying rent during the notice period.
Pay everything due through the move-out date. That means base rent and "additional rent": real estate tax and operating expense pass-throughs, utilities and any other charges the lease calls rent.
Move out completely. Remove furniture, equipment and trash, leave no subtenants behind, and return the space in the condition the guarantee requires, often "broom clean."
Hand back the keys. Deliver keys and access cards to the landlord or managing agent, and get a receipt.

Some guarantees add more, such as a lump-sum payment on surrender or a requirement that the tenant be current on rent on the day it gives notice. Others say only what the four steps above say. Either way, keep proof of every step: the notice and its delivery receipt, payment records, dated photos of the empty space, and the key receipt.

What the guarantor owes, and what it does not

After a proper exit, the guarantor owes what accrued up to the move-out date, and nothing for the months after it. In practice:

Owed: unpaid rent and additional rent up to the surrender date, including any back rent, plus anything else the guarantee expressly covers, such as the landlord's legal fees for collecting it.
Not owed: rent for the rest of the lease term, and, under a June 2026 appellate decision, costs that only arise after the move-out, such as restoring the space, unless the guarantee clearly says otherwise.
If the exit fails: the release never happens. The guarantor can stay liable as rent keeps coming due, until the conditions are met or the lease ends.

The business is a separate matter. A good guy exit releases the person who signed the guarantee, not the company that signed the lease. Unless the landlord agrees to end the lease, the company still owes rent for the rest of the term. New York landlords also generally have no duty to re-rent a commercial space to reduce what the departing tenant owes. For a company with real assets, that can still be a large debt.

Full personal guarantee vs. good guy guarantee

Full personal guarantee	Good guy guarantee
Covers: every dollar the business owes for the whole lease term	Covers: what the business owes up to the day it properly moves out
Ends: when the lease ends and everything is paid	Ends: on surrender, if the notice, payment, condition and keys requirements are met
If the business closes mid-lease: the guarantor can be sued for the remaining rent	If the business closes mid-lease: the guarantor's exposure stops at the move-out date
Where it's used: often asked of new businesses with little credit history, sometimes with a dollar cap	Where it's used: a common middle ground in NYC office and retail leases

What the 2025 and 2026 court decisions changed

For a few years, guarantors had reason to worry. In 2022 an appellate court held two guarantors liable for about $1.27 million even though the tenant had moved out, because the lease said a surrender only counted if the landlord accepted it in writing. Many landlords' standard leases contain that language, so a guarantor could do everything the guarantee asked and still not be released.

New York's highest court, the Court of Appeals, took up the question in 1995 CAM LLC v. West Side Advisors, LLC. The tenant sent written notice in late October 2020, moved out on November 30, 2020, walked through the space with the building superintendent and handed him the keys. The landlord never accepted the surrender in writing and sued the guarantor for rent from both before and after the move-out. On October 21, 2025, the court ruled 5 to 2 that the guarantor was not liable for rent after the move-out. The guarantee tied the release to things the tenant does, vacating and surrendering, so the guarantor's liability ended when the tenant moved out. The court also noted that the guarantee's 30-day notice requirement would make no sense if the release depended on a step only the landlord could take.

Decision	What it held
122 E. 42nd St., LLC v. Scharf (Appellate Division, First Department, December 15, 2022)	The lease required the landlord's written consent to a surrender, and the guarantee was tied to the lease, so the guarantors stayed liable for about $1.27 million.
ROC-Lafayette Assoc., LLC v. Sturm (Appellate Division, First Department, December 3, 2024)	The guarantee set its own surrender conditions and did not adopt the lease's written-acceptance rule, so the guarantors were released when the tenant moved out.
1995 CAM LLC v. West Side Advisors, LLC (Court of Appeals, October 21, 2025)	The guarantor's liability ended when the tenant gave notice, vacated and returned the keys. The landlord's written acceptance was not needed under that guarantee.
213 W. 23rd St. LLC v. Crunch Holdings LLC (Appellate Division, First Department, June 9, 2026)	A guarantee requiring the tenant to be "current" on rent at surrender meant charges due by that date. Restoration costs arising after the move-out did not block the release.

The lesson for both sides is the same: the words of the guarantee decide the outcome. A guarantee that ties the release to the tenant's own actions works the way it reads. A landlord who wants its written acceptance to be a condition has to say so clearly in the guarantee itself.

Common misconceptions

"A good guy guarantee lets the business walk away from the lease." It lets the guarantor walk away. The company that signed the lease still owes the remaining rent unless the landlord agrees to end the lease early.

"Close enough is good enough." Courts enforce the conditions as written. Short notice, an unpaid charge, or furniture left behind can block the release.

"I can give notice once we've moved out." The notice period runs before the surrender, and rent keeps accruing during it. A business that leaves first and writes later has usually missed the condition.

"Subletting the space releases me." It does not. A subtenant still in the space on move-out day can mean the space was never surrendered.

"Selling the business ends my guarantee." Usually not. The guarantee generally stays in place after an assignment or sale unless the lease or guarantee says the original guarantor is released.

Negotiating the guarantee: what to ask for

Most of these points are settled at the letter of intent stage, before the lease is drafted, which is the cheapest time to raise them. For the rest of the lease, see our Commercial Lease Checklist for First-Time NYC Tenants.

Term	What to ask for
Notice period	The shortest the landlord will accept, such as 90 days rather than 180. Why: the business pays rent throughout the notice period.
What counts as surrender	Release tied to the tenant's own steps: notice, vacating, paying through the move-out date and returning keys. Why: the October 2025 decision turned on exactly this wording.
Guarantee vs. lease	A sentence saying the guarantee's release terms control over anything in the lease, including a written-acceptance requirement. Why: in 2022, cross-references to the lease kept guarantors liable.
"Current on rent"	Defined as amounts billed and due by the surrender date. Why: tax and operating expense reconciliations are often billed months later.
Condition of the space	"Broom clean" with personal property removed, and no restoration work as a condition of release. Why: restoration disputes are a common way to argue the exit failed.
Cap or burn-off	A dollar cap, or a guarantee that shrinks or ends after a set period of on-time payments. Why: it limits exposure even if the exit is never used.
Security deposit	Permission to apply the deposit to the final months' rent. Why: it makes paying through the move-out date easier.
Sale of the business	Release of the original guarantor if the lease is assigned to a buyer that provides its own guarantee. Why: otherwise the guarantee usually survives the sale.

Being asked to sign a personal guarantee? We can review the wording before you sign and negotiate a good guy exit that works. Call (212) 490-0900 or email mail@margolislawfirm.com.

For landlords

A good guy guarantee is not a promise to pay the whole lease. It is a promise that a failing tenant will leave quickly, pay to the last day and hand back a clean space. It works best when the guarantee and the lease say the same thing.

Say what you mean in the guarantee itself. After the October 2025 decision, a landlord that wants the release to wait for its written acceptance should state that in the guarantee, not rely on a cross-reference to the lease.
Define "current" and what survives. If later-billed charges, such as year-end tax and operating expense reconciliations or restoration costs, should stay the guarantor's responsibility, the guarantee has to say so.
Document the surrender. Walk the space, photograph it, record the date the keys came back, and confirm in writing what you received.
Size the security deposit with the good guy exit in mind. The deposit or letter of credit is what covers the period after the guarantor is released.
Remember the tenant is still liable. The company that signed the lease remains responsible for the rest of the term unless you agree to end the lease.

Frequently asked questions

What is a good guy guarantee?

A limited personal guarantee used in commercial leases. The guarantor is personally liable only until the business gives the required notice, pays through its move-out date and returns the space and keys. After that, the guarantor owes nothing more for the rest of the term.

What is the difference between a good guy guarantee and a personal guarantee?

A full personal guarantee covers everything the business owes for the whole lease. A good guy guarantee covers only what the business owes up to the day it properly moves out.

Is a good guy guarantee enforceable in New York?

Yes. New York courts enforce these guarantees according to their wording, both for and against guarantors. The October 2025 Court of Appeals decision confirmed that a release tied to the tenant's own steps works as written.

How much notice does a good guy guarantee require?

Whatever the guarantee says. Periods of 90 to 180 days are common. The notice usually has to be in writing and sent the way the lease requires.

Does the landlord have to accept the surrender?

Not if the guarantee ties the release to the tenant vacating and returning the keys, as in the October 2025 decision. If the guarantee clearly requires the landlord's written acceptance, that requirement can still apply.

Is the business still liable after a good guy exit?

Yes. The release covers the person who signed the guarantee. The company that signed the lease still owes rent for the rest of the term unless the landlord agrees to end the lease.

What if the business is behind on rent when it leaves?

The guarantor owes the back rent and charges up to the move-out date. Some guarantees go further and require the tenant to be fully current before the release can happen at all.

Is it "guarantee" or "guaranty"?

Both are correct. Leases and legal documents often use "guaranty" for the document and "guarantee" for the promise, but the terms are used interchangeably.

Working with The Margolis Law Firm

The Margolis Law Firm has negotiated New York City commercial leases for more than four decades. Our founder, Jeffrey A. Margolis, has negotiated hundreds of office, retail and industrial leases for landlords and tenants, and teaches Commercial Leasing at Brooklyn Law School. We review guarantees before they are signed, negotiate good guy terms, and advise owners and landlords when a tenant is planning to leave.

Learn more about our commercial real estate practice.

The Margolis Law Firm · 420 Lexington Avenue, Suite 2059, New York, NY 10170 · (212) 490-0900 · mail@margolislawfirm.com

This guide is general information about New York commercial leasing as of the date above and is not legal advice. The result in any case depends on the exact wording of the lease and guarantee. Please consult an attorney about your specific situation before acting.

Sources

Court decisions

Book a Consultation