What Personal Guarantors Should Know About the ‘Good Guy Clause’

Hand signing a lease to represent a good guy clauseIf you are a business owner in the New York commercial leasing space you almost certainly will have signed what’s known as a “good guy clause,” guaranteeing rent payment. In essence, the clause states the individual guarantor will be a “good guy” and personally guarantee the terms of the lease, i.e. paying rent and any additional charges as they become due. With the requisite notice and surrender of the premises, the guarantor’s liability for the commercial rent, charges, etc., terminates. The period guaranteed will not continue past vacating or surrendering the premises.

A good guy clause can minimize or help you escape personal liability for a company that can no longer afford to pay rent. The guarantee is almost always limited to most fees and charges prior to vacating and surrendering the premises to the landlord. It provides the impetus for many to get up and leave when payment is no longer possible. Overstaying your welcome will merely increase liability for the personal guarantor. If you are not concerned about the prospect of personal liability for a debt or consider yourself judgment-proof, the guarantee will not motivate you to leave.

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What Business Owners Should Know Before They Guarantee a Line of Credit

Piles of cash to represent a Guarantee a Line of CreditMost business owners have a line of credit with the bank but don’t realize that, as the business owner, they may be personally responsible for repaying any monies loaned. Often, especially in uncertain financial times, the bank will want someone to guarantee a line they might not otherwise make — usually the officer of the borrowing company. As the business owner, the bank may ask you to personally guarantee a line of credit for your company.

Unlike a traditional loan, which requires you to borrow the face amount of the loan and begin repayment of interest and principal, a line of credit requires you to repay only the amount you borrowed plus any added interest. If you don’t borrow, there’s nothing to repay. When it comes to unexpected expenses and opportunities, a line of credit provides a loan at the ready.

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Does Your Customer’s Personal Guarantee Protect Future Transactions?

Image of a hand signing an agreement to represent a personal guarantee.Many small business owners form corporations and limited liability companies to personally insulate themselves from the obligations and debts of their business. Requiring the owner or officer of a company to enter a personal guarantee provides protection against the insulation a corporation or limited liability company provides.

Many companies who sell products, especially on credit, require their corporate customers to execute both a credit application and a personal guarantee. With a signed guarantee, the seller has recourse against the owner/guarantor should they default on payment.

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How to Remove a Default Judgment in New York

A gavel to represent Remove a Default JudgmentIn order to vacate, set aside, or remove a default judgment in New York, you must make a motion to the court in which the judgment was entered. The motion will contain a specific request for the court to vacate the judgment and return monies taken to satisfy the judgment.

There are two ways to file a motion with the Court. Both include notice to the judgment creditor or the entity or person the judgment was assigned to. The method chosen will be pre-determined by what, if anything, the judgment creditor did to enforce the judgment or, if you need to rush to vacate the judgment because of other circumstances in your business or life.

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