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New York City Extends Suspension of Some Personal Guarantees of Commercial Rents

In the June issue of this Client Advisory, we reported that New York City had adopted legislation intended to temporarily bar landlords from enforcing personal guarantees of certain commercial leases. The law applies to defaults in payment of rent, utilities, or taxes due for the period beginning March 7, 2020 under commercial leases for premises where the tenant was required to close to the public, limit retail operations, or cease in-person service of food or beverages as the result of the coronavirus emergency. Where it applies, the law prohibits landlords from enforcing any lease or rental agreement provision providing for a guarantee by any natural person other than the tenant.

This Local Law has been extended in duration and now applies to a natural person’s guarantee of a covered business’s rent obligations if “[t]he default or other event causing such natural persons to become wholly or partially personally liable for such obligation occurred between March 7, 2020 and March 31, 2021, inclusive.” The constitutional validity of this legislation remains the subject of pending litigation.