When Affirmative Defenses Fail, Guarantors May Prevail On the Question of Lease Enforceability

It would seem intuitive, if not axiomatic, to understand third-party guaranties and commercial leases as distinct legal instruments. Although the two are often executed simultaneously, and it is not unusual for a single person to sign a lease in her corporate capacity and a guaranty for that same lease in her personal capacity, each document creates its own set of obligations as between a different set of contracting parties. Indeed, in its recent decision in I Bldg, Inc. v. Hong Mei Cheung (137 A.D.3d 478), the Supreme Court of New York, First Department Appellate Division, wasted few words in distinguishing the two: “Guaranties and leases are separate documents; the former impose obligations on the guarantors and the latter impose obligations on the landlord and the tenant.” The parallel phrasing of this sentence is key to understanding how leases and guarantees work together as related, but separate, sets of obligations.