Mayor Bill de Blasio just signed a bill that is aimed at protecting lease guarantors from personal liability after their businesses were shut down because of the standing governmental orders. With eviction proceeding shut down until well into the summer, the legislation's goal is to make sure a landlord, since it can't bring an eviction proceeding right now, doesn't decide to sue an individual under the guaranty.

One attorney has identified a problem with the measure however: Namely that the bill references a "provision in a commercial lease or other rental agreement." The hitch is this, attorney Maxwell Breed, a real estate and litigation partner at New York law firm Warshaw Burstein, tells GlobeSt.com: guaranties generally are separate instruments and not "provisions" of leases, or other agreements.

"Most of the time a guaranty is not a provision of a lease agreement but rather an independent instrument," he says. "That raises a question in my mind as to whether this bill will even accomplish the goal set out in the bill."

There is also the broader question of whether such an abridgement of contact is valid in the first place, but that is not the point Breed is honing in on. It would be possible to file an action under this argument, he believes. "Again, guaranties are usually independent of the leases themselves."

But he isn't advising landlords to do that.

"From a practical perspective I don't know if you want to go in front of a judge in this current environment filing an action against the guarantor because you couldn't go after the tenant because of the moratorium.

Also, the argument itself—insurance versus lease agreement—could be seen as a loophole, he continues.

"If you are litigating you want to come across as the good guy and you definitely don't want to be seen as pushing a case against, for example, a restaurant that is hurting from a shutdown."

If this bill does make its way into a courtroom, Breed believes it will be because of the constitutionality issues it raises. "You could construe this bill as changing rights and obligations under what is otherwise a valid contract."

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New Law Protecting Lease Guarantors from Personal Liability Has No Teeth, Attorney Says

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