A Fox Rothschild real estate litigation team led by Joshua Kopelowitz secured an important appellate victory that upholds an office landlord’s right during the pandemic to recover unpaid rent from a tenant and its guarantor.

“This ruling underscores that the Guaranty Law does not apply to office space and that the guarantor therefore remains liable,” said Kopelowitz, who was assisted in the case by Fox attorney Bansari Sheth.

In its decision, the New York Supreme Court’s Appellate Division ruled that a lower court was wrong to grant summary judgment in favor of defendants Ideko Productions LLC and its guarantor. The unanimous five-justice panel ordered that Fox’s client, 373-381 PAS Associates LLC, is entitled to judgment in its favor and a hearing to assess the damages it is owed.

Ideko’s live events business took a sharp downturn in 2020 due to COVID restrictions, but the appellate court said that did not justify its decision to stop paying rent and vacate the premises. The office space itself was not affected by the pandemic restrictions, the court noted, and Ideko was always able to use it for the purposes spelled out in the lease.

The victory is important for all commercial landlords because it clarifies the scope of guarantor liability under New York’s Guaranty Law and that a tenant’s use of office space is not protected under the law. The justices specifically held that a failure to follow the terms of the “good guy guaranty” – a clause included in most New York City commercial leases – means a guarantor remains liable.