On September 28, 2020, the New York City Council amended NYC Admin. Code Section 22-1005, which made personal guaranty provisions in some commercial leases unenforceable. The protection afforded to some business owners is now in effect until March 31, 2021.
In addition to extending the end date of the default period to March 31, 2021, the City Council clarified that the protections cover personal guaranty provisions that “relate to” to commercial leases or other rental agreements. The prior version of the law was unclear as to whether the guaranty provision had to be written into the lease document or could be in a separate document.
Now, the guaranty provision can be in the lease itself or in a separate document; both are covered.
In addition, even after the amendment, the law remains unclear whether the personal guaranty provisions are permanently unenforceable or merely suspended until March 31, 2021.
The legislation renders unenforceable (at least for now) only those guaranty provisions for tenants that were affected by Executive Orders 202.3 (restaurants), 202.6 (non-essential retail establishments), and 202.7 (barbershops, salons, tattoo parlors, etc.).
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