On March 17, 2015, Jay B. Itkowitz and Michelle Maratto Itkowitz taught a Continuing Legal Education course entitled, Grasping the Good Guy Guaranty in New York for Lawline.com. The course contains a lot of new material and was presented in an engaging conversational style. We were very pleased to see that this course already has a 96% approval rating. Here is the link to the program.
Here is video clip of the presentation, and below THAT is an excerpt from the material on "Clawbacks".
This is a sample of the material:
In the above example, the rent concession comes at the beginning of the lease term and it lasts for five months, totaling almost $78,000.
Assume that tenant’s principal has signed a simple GG Guaranty guarantying the tenant’s obligations up until the time of surrender. If tenant becomes unable to carry the lease to its full term and is forced to surrender, can the guarantor be held liable for the abatement amount in light of the following language in the lease? Yes. Recall that guarantors are liable to the full extent of tenant’s obligations.
Tenant acknowledges that the consideration for the aforesaid abatement of minimum rent is Tenant’s agreement to perform all of the terms, covenants and conditions of this Lease on its part to be performed. Therefore, if Tenant shall be in default under any of the terms, covenants and conditions at any time, during the term hereof, the aggregate amount of all minimum rent that was abated shall immediately become due and payable by Tenant to Landlord.
If the tenant breaches the lease by terminating early, that default triggers the “clawback” of the rent concession given at the beginning of the term making tenant liable for the concession amount under the lease. Thus, landlord may pursue the guarantor for the concession amount.