Will I get my security deposit back when ending a commercial lease with a good guy guaranty?

[Eliza C]

Hello everyone,

My commercial lease is in Manhattan, NY.

My lease includes a good guy guarantee that requires 6 months notice. And from what I interpret from the security section of the lease, is that if I fulfill the lease, then I get my security deposit back. But does a using a good guy guarantee with the 6 months notice, fall into fulfilling a lease?

My landlord is a huge corporation that has over 100 buildings, so it's not like I can personally speak to a landlord and talk this out. Every time I talk to anyone in the company regarding my tenancy, I get directed to the legal department and then which i get recited excerpts of my lease to a T, so I'd like to get my chickens in a row before I alert them I want the end the lease.

I assume I'll have to go through a lawyer to give them official notice of my ending the tenancy...
Below I've pasted excerpts of my lease. I greatly appreciate any advice I can receive on the matter, and thank you all for your help. - Eliza

"35. SECURITY DEPOSIT A. Tenant shall deposit with Landlord the following simultaneously with the execution and delivery of this Lease to Landlord, the sum of XXX 00/100 Dollars ($XXX) (the "Security Deposit"), by delivering an official bank check as security for the faithful performance, observance and compliance with all of the terms, covenants and conditions of this Lease on Tenant's part to perform, observe or comply with. Tenant agrees that, in the event that Tenant defaults under any of the terms, covenants or conditions in this Lease on Tenants part to observe, perform or comply with (including, without limitation, the payment of any installment of Fixed Rent or any amount of Additional Rent), Landlord may use, apply, or retain the whole or any part of the Security Deposit to the extent required for the payment of any Fixed Rent, Additional Rent, or any other sums as to which Tenant is in default, or for any sum that Landlord may expend or may be required to expend by reason of any such default (including any damages or deficiency accrued before or after summary proceedings or other re-entry by Landlord). In the event that Landlord applies or retains any portion or all of the Security Deposit, the amount not so used, applied or retained shall continue to be treated as the Security Deposit, and Tenant shall restore the amount so applied or retained within three (3) days after Landlord's demand therefor, so that the Landlord shall have at all times three (3) full months' Fixed Rent as the Security Deposit for Tenant's faithful performance of its obligations pursuant to this Lease. Further, on or before every Lease Year in which the Fixed Rent increases, Tenant shall deliver to Landlord an official bank check, so that the Landlord shall have at all times three (3) full months' Fixed Rent as the Security Deposit for Tenant's faithful performance of its obligations pursuant to this Lease. In the event that Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, that portion, if any, of the Security Deposit not used, applied or retained shall be returned to Tenant no later than one hundred twenty (120) days after the later of (x) Expiration Date (or such earlier date upon which the Lease may terminate) and y. delivery of possession of the Demised Premises to Landlord, in accordance with, and subject to, the applicable provisions of this Lease. B. The Security Deposit deposited under this Article shall be held in a non-interest bearing account, in a commercial bank which is a member of the New York Clearing House Association located in the City of New York selected, from time to time, by Landlord in its sole discretion. Landlord agrees, further to hold the Security Deposit in such an account for the entire term of this Lease, subject, however, to the terms of Section 35.A above with respect to the use, application or retention of the Security Deposit. Unless required by Legal Requirements, Landlord shall not be required to credit any Security Deposit with the interest for any period during which Landlord holds a cash Security Deposit as provided herein. In the event Landlord is required by Legal Requirements to deposit the Security Deposit into an interest bearing account, the interest earned on the Security Deposit shall accrue as part of the Security Deposit, less one percent (1%) per annum of the principal amount thereof, which shall be retained by Landlord and applied as a service charge in connection with the maintenance of such Security Deposit account. C. In the event of a sale or transfer of the Building or the then Landlord's interest therein or a leasing by the then Landlord of any of same, Landlord shall have the right to transfer or assign such Security Deposit to the vendee, transferee or lessee, and Landlord shall notify Tenant, by certified mail, return receipt requested, of such sale, transfer or lease, together with the name and address of such vendee, transferee or lessee, and Landlord shall thereupon be released by Tenant from all liability for the return of the Security Deposit. In such event, and subject to the satisfaction of the foregoing requirements, Tenant agrees to look solely to the new landlord for the return of the Security Deposit. D. Tenant covenants that it will not assign or encumber, or attempt to assign or encumber, the Security Deposit, and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment, or attempted encumbrance. "

 

[Eliza C]

The following is my guaranty:

"THIS GUARANTY, dated as of the date set forth above made by the undersigned, AAA, an individual residing at BBB, New York, New York("Guarantor"), for the benefit of the landlord set forth above ("Landlord") having an office JJJ. WHEREAS, Guarantor is the sole shareholder of the tenant set forth above ("Tenant")• WHEREAS, Guarantor has requested that Landlord grant Tenant a lease of even date herewith (the "Lease") for the ground level and basement (the "Demised Premises") of that certain building located at the street address referred to above (the "Building")• WHEREAS, Guarantor will receive economic benefits by virtue of the Lease from the business Tenant will be conducting at the Demised Premises; and WHEREAS, Landlord is unwilling to enter into the Lease unless the Guarantor enters into this Guaranty. NOW, THEREFORE, to induce Landlord to enter into the Lease with Tenant, and for other good and valuable consideration, each to the other in hand paid, the receipt and sufficiency of which being hereby acknowledged, and in consideration of the Demised Premises, Guarantor for himself, his successors and assigns, covenants and agrees as follows: 1. All capitalized terms not otherwise defined in this Guaranty shall have the same meaning that they have in the Lease. 2. Each of the obligations of Guarantor hereunder shall be joint and several. 3. (a) Guarantor, for himself, his successors and assigns, absolutely, irrevocably and unconditionally guarantees to Landlord, its successors and assigns, (i) the full and faithful payment and performance and observance of all obligations to be performed and observed by Tenant under the Lease, including, without limitation, the prompt and punctual payment of all Fixed Rent, Additional Rent and Taxes and all other sums payable under the Lease including, without limitation, reasonable costs of collection and enforcement (including reasonable legal fees and disbursements) with the same force and effect as if Guarantor had been signatory to the Lease, jointly and severally liable thereunder with Tenant, (ii) the payment to Landlord of any and all damages arising from the rejection of the Lease in a bankruptcy or insolvency proceeding and (iii) the timely satisfaction and/or discharge of any liens filed or made against the Demised Premises or any part thereof that arise during Tenant's occupancy of the Demised Premises and for any work performed by Tenant and/or any work alleged to have been performed by Tenant (including, without limitation, any liens filed or made against the Demised Premises after the Final Obligation Date (as hereinafter defined) for any work performed or alleged to have been performed by or on behalf of Tenant), through and including the date that Tenant and its assigns, sublessees and licensees, if any, shall have completely done all of the following: (x) vacated and surrendered the Demised Premises to Landlord in the condition required pursuant to the terms of the Lease and free and clear of all liens, y. the receipt by Landlord of all unpaid Rent which shall have accrued under the terms of the Lease at any time up to and including such delivery of possession of the Demised Premises (in immediately available funds which shall be lawful money of the United States of America), and (z) delivered the keys to the Demised Premises to Landlord (the "Final Obligation Date"); provided however that Tenant has given no less than six (6) months' prior written notice to Landlord, in the form and manner provided in the Lease, of Tenant's intent to so vacate and surrender the Demised Premises to Landlord (accompanied by a duly executed and acknowledged declaration of surrender in form satisfactory to Landlord), and in the event that Tenant has not given such notice to Landlord and so vacated and surrendered the Demised Premises, then the Final Obligation Date, and Guarantor's liability hereunder, shall be extended to the date which is six (6) full months after Tenant so vacates and surrenders the Demised Premises in the condition required pursuant to the terms of the Lease and free and clear of all liens; provided, further, however, such prior notice from Tenant shall not in any way affect Tenant's obligations under the Lease including, without limitation, the obligation under the Lease to pay Fixed Rent and Additional Rent through the Expiration Date. In addition, Guarantor, for himself, his successors and assigns, absolutely, irrevocably and unconditionally guarantees to Landlord, its successors and assigns, full payment of the Security Deposit to Landlord in the event Landlord shall be unable and/or does not collect the full Security Deposit. (b) The guaranteed obligations shall include, without limitation, claims in any bankruptcy or insolvency proceeding, late charges, interest, reasonable costs of collection and enforcement (including reasonable attorneys' fees and disbursements) and damages for any failure by Tenant to pay or perform any of its obligations under the Lease or otherwise. (c) The term "Tenant" means all persons or entities at any time holding the tenant's interest in the Lease, including, without limitation, the original Tenant named in the Lease, its successors and assigns, a trustee of Tenant's estate in any bankruptcy or insolvency proceeding, an assignee of Tenant's interest in the Lease by assignment pursuant to any bankruptcy or insolvency laws, and their respective successors and permitted assigns, notwithstanding that the original Tenant named in the Lease may no longer be in possession and that Landlord may not have consented to such assignment. Notwithstanding anything to the contrary contained herein, subject to the terms and conditions of Article 28 of the Lease (including, without limitation, (i) Tenant providing Landlord with the information and documentation required under Section 28.E of the Lease and (ii) the assignee's written assumption of all of the terms, covenants and conditions of the Lease to be observed or performed by Tenant), in connection an assignment of the Lease to a corporation or other entity which acquires all or substantially all of the outstanding capital stock of Tenant or all or substantially all of the asset of Tenant, Guarantor shall be relieved of its liability under this Guaranty, if and to the extent that Tenant is able to provide an acceptable replacement guarantor (which replacement guarantor shall be approved by Landlord in its sole but reasonable discretion, but only if such replacement guarantor has a sufficient net worth, as reasonably determined by Landlord, to fulfill Tenant's obligations under the Lease, but in no event less than 2 a tangible net worth and liquidity (exclusive of good will and any other intangible assets) determined in accordance with generally accepted accounting principles, as evidenced by a current audited financial statement, equal to or greater than (x) Guarantor's tangible net worth and liquidity immediately prior to any such transfer and y. Guarantor's tangible net worth and liquidity as of the date hereof), which replacement guarantor enters into a replacement Guaranty in similar form hereto.

 

[Eliza C]

4. (a) The validity and enforceability of this Guaranty and the obligations of the Guarantor hereunder shall not terminate and not be affected or impaired by reason of the invalidity or unenforceability of the Lease or any provision thereof, any offsets or defenses of Tenant, the commencement or continuation of any bankruptcy or insolvency action or proceeding or the granting of relief thereunder, including, without limitation, the granting of any stay or limitation on the collection of rent or other rights and remedies of Landlord, the rejection of the Lease by a trustee in a bankruptcy or insolvency proceeding, the assertion by Landlord against Tenant (or Landlord's failure, waiver or delay in asserting) of any of the rights or remedies reserved to Landlord pursuant to the provisions of the Lease, or allowed at law or in equity. (b) Without limiting the generality of the foregoing, the obligations of Guarantor under this Guaranty shall not be affected or impaired by (i) the release or discharge of Tenant in bankruptcy or other insolvency proceeding, (ii) the impairment, limitation or modification of Tenant's liability or estate, or of any remedy for the enforcement of Tenant's obligations under the Lease, in any bankruptcy or other insolvency proceeding or by the operation of any present or future provisions of bankruptcy laws or other statues or decisions of any court, (iii) the rejection of the Lease, or the assignment, transfer or assumption of the Lease, by Tenant or any trustee in bankruptcy or other insolvency proceeding, (iv) any disability or other defense of Tenant, or (v) the cessation from any cause whatsoever of the liability of Tenant under the Lease. (c) Guarantor hereby agrees that his liability hereunder shall be unaffected by (i) any amendment or modification of the provisions of the Lease or any other instrument made to or with Landlord by Tenant, (ii) an extension of time for performance required thereby, (iii) any sale or other disposition of the Demised Premises or any part thereof, (iv) exculpatory provisions, if any, in the Lease or any other instrument made to or with Landlord by Tenant limiting Landlord's recourse to any particular property or to any other security, (v) the release of Tenant or any other person or entity from performance or observance of any of the agreements, terms or conditions contained in any of said instruments by operation of law, whether made with or without notice to Guarantor, (vi) the release of any other guarantor from any obligation or liability hereunder, or (vii) Landlord's failure to perfect, protect, secure or insure any security interest or lien given as security for Tenant's obligations under the Lease. (d) Other than the performance in full by Tenant of its obligations under the Lease, it is understood and agreed that Guarantor shall not be released by any act or thing which might, but for this provision of this instrument, be deemed a legal or equitable discharge of a surety or a guarantor, or by reason of any waiver, extension, modification, forbearance or delay or other act or omission of Landlord or its failure to proceed promptly or otherwise, or by reason of any action taken or omitted or circumstance which may or might vary the risk or affect the rights or remedies of Guarantor or by reason of any further dealings between Tenant and Landlord, whether relating to the Lease or otherwise, and Guarantor hereby expressly waives and surrenders any 3 defense of its liability hereunder based upon any of the foregoing acts, omission, things, agreements, waivers or any of them and hereby expressly waives and relinquishes all other rights and remedies accorded by applicable law to guarantors and sureties; it being the purpose and intent of the parties hereto that the obligations of Guarantor hereunder are absolute and unconditional under any and all circumstances. 5. This Guaranty shall extend and apply to, and shall remain in force and effect as to the obligations described above as well as all obligations of Tenant under any and all modifications, extensions and renewals of the Lease or any such lease of other space, any assignment, subletting or holding over by Tenant, without any notice to or the consent of Guarantor, which right to notice and to consent Guarantor hereby waives. 6. Landlord may, at its option, proceed against Guarantor without having commenced any action against or having exhausted any remedy or claim or having obtained any judgment against Tenant. 7. Guarantor shall pay all of Landlord's costs and expenses (including, without limitation, reasonable attorneys' fees and disbursements) in enforcing this Guaranty. 8. Guarantor waives trial by jury in any action or proceeding brought by either Landlord or Guarantor relating to the Lease or this Guaranty and waives the benefit of any statute of limitations affecting Guarantor's liability under this Guaranty. Guarantor will be conclusively bound by any judgment rendered in any action or proceeding by Landlord against Tenant (wherever brought) as if Guarantor was a party thereto, even if not joined as a party in such action or proceeding. 9. This Guaranty shall be deemed to have been made in the State of New York. Guarantor consents to the jurisdiction of the courts of the State of New York, and the rights and liabilities of Landlord and Guarantor shall be determined in accordance with the laws of the State of New York; and no defense shall be interposed in any action or proceeding unless such defense is also given or allowed by the laws of the State of New York. No delay on the part of Landlord in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any waiver of any rights or powers of Landlord or consent by Landlord be valid unless in writing duly executed by Landlord. This Guaranty shall be binding upon Guarantor and shall inure to the benefit of Landlord and Landlord's successors and assigns, may not be terminated or modified, and no provision may be waived, except in a writing signed by the person sought to be charged. 10. Guarantor represents and warrants that he is solvent and will not be rendered insolvent by this Guaranty or the enforcement of Landlord's rights and remedies under this Guaranty. Guarantor represents and warrants that it is the sole shareholder of Tenant. 11. Except as otherwise specifically set forth in this Guaranty, Landlord shall not be required to provide Guarantor with notice of Tenant's non-payment, non-performance or nonobservance of any of Tenant's obligations guaranteed hereunder and the Guarantor waives the right to receive such notice. Guarantor further waives any right to require that resort be had to any security or other credit in favor of Tenant prior to enforcing Landlord's rights against Guarantor. 4 12. Guarantor represents and warrants that this Guaranty has been duly executed and delivered and constitutes such Guarantor's valid and binding agreement in accordance with its terms. 13. The undersigned agrees to submit to personal jurisdiction in the State of New York in any action or proceeding arising out of this Guaranty. 14. All notices, demands, elections and other communications desired or required to be delivered or given under this Guaranty shall be in writing, and shall be deemed to have been delivered and given when delivered by hand, or on the third (P) business day after the same have been mailed by first class registered or certified mail, postage prepaid, or one (1) business day after delivery to an overnight courier such as FedEx for next business day delivery, enclosed in a securely sealed envelope addressed to the party to which the same is to be delivered or given, in all cases, at such party's address as set forth in this Guaranty or at such other address as said party shall have designated in writing in accordance with this paragraph. Notices to Landlord shall be sent to do DDD, New York, New York 10119, Attention: Mr. YYY, with a copy by like means to CCC LLP, ## Times Square, New York, New York 10030, Attention: JJJ Esq. Notices to Guarantor shall be sent to the address set forth above. 15. Unless and until all the covenants and conditions in the Lease on Tenant's part to be performed and observed are fully performed and observed, Guarantor: (a) shall have no right of subrogation against Tenant by reason of any payments or acts of performance by Guarantor in compliance with the obligations of Guarantor hereunder; (b) waives any right to enforce any remedy which Guarantor now or hereafter shall have against Tenant by reason of any payments or acts of performance by Guarantor in compliance with the obligations of Guarantor hereunder; and (c) subordinates any liability or indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant to Landlord under the Lease. [Signature page to follow]

 

[PayrollHRGuy]

I assume I'll have to go through a lawyer to give them official notice of my ending the tenancy...

I think that assumption is safe to make if you don't understand the contract. Contract review is well beyond the scope of this forum.