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The Defenses Available to a Guarantor or a Commercial Lease are Further Narrowed in New Jersey



by Capehart Scatchard P.A. - Mount Laurel Office

March 7, 2013

Previously published on February 2013

In a case involving a fact pattern that is all to common in today’s challenging commercial real estate market, the United States Court of Appeals for the h ird Circuit, interpreting New Jersey law, recently rejected what would have been a clever defense put forward by the guarantor of a commercial lease, in an unsuccessful attempt to escape what is generally regarded as “airtight” liability. In the case, G&S Livingston Realty, Inc. v. CVS Pharmacy, Inc., the lease in question contained a “co-tenancy” provision, which gave the tenant whose obligations were the subject of the guarantee the right to choose to pay substantially reduced rent, if and when certain occupancy requirements in the shopping center in question were not met and, if those conditions were not met for a specii ed amount of time, the right to terminate the lease on that basis.


 

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