A Guaranty Covers the Lease It Guaranteed — Not the One That Came After

Paganini v 40 W. 127th St., LLC, 204 AD3d 473 (1st Dept 2022)

By Bikram Singh, Esq. | Singh & Rani LLP

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Lease guaranties are full of language that sounds absolute. Remains in full force and effect as to any renewal, change or extension. Will not be affected by any change in the Lease, whatsoever. Landlords read that language as a blank check. In Paganini v 40 W. 127th St., LLC, the Appellate Division, First Department, unanimously held that it is not.

Bikram Singh of Singh & Rani LLP represented the plaintiffs-tenants and the third-party defendants-guarantors.

The Posture

The tenants sued the landlord. The landlord responded with a third-party action against the guarantors, seeking to enforce their guaranties. Supreme Court, New York County (Louis L. Nock, J.) dismissed those third-party claims by order entered on or about October 28, 2021. The First Department affirmed on April 12, 2022, with costs.

The Timeline That Decided the Case

The facts are simple, and the sequence is everything:

• December 2018 — The tenants sign a lease. The guarantors sign guaranties tied to it. Critically, the lease contains no option to renew or extend.
• August 31, 2019 — That lease expires by its own terms.
• Afterward — The parties sign two new leases. Neither identifies itself as a renewal.
• 2020 lease — This one adds a provision that did not exist before: an early termination clause.

The landlord's third-party claim sought damages under that early termination provision — a clause the guarantors had never seen, in a lease they had not guaranteed, executed after the guaranteed term had already ended.

The Holding

The Court applied the settled rule that a guaranty must be construed strictly by its terms. A guarantor's undertaking as to a lease "and all extensions or renewals" means what it says: the guarantor is responsible for the tenant's obligations during the initial term, or during the term as expressly extended or renewed (Lo-Ho LLC v Batista, 62 AD3d 558, 560 [1st Dept 2009]).

The guaranties here reached any change, extension of time, or renewal of the 2018 lease. They did not reach new lease agreements (Elite Gold, Inc. v TT Jewelry Outlet Corp., 31 AD3d 338, 340 [1st Dept 2006]).

And no express extension or renewal ever occurred. There was no renewal option to exercise. The 2018 lease simply expired. What followed were fresh agreements that never described themselves as renewals — and that introduced substantive new terms the guarantors had never agreed to.

Interpreting the guaranties in the strictest manner, the Court agreed with the motion court: the 2020 lease was not an extension of the 2018 lease, and the landlord could not recover from the guarantors.

Where Paganini Sits in the Case Law

The decision has since become a useful marker on both sides of the line.

In 35th St. Assoc. v Sasson, 2023 NY Slip Op 05353, the First Department cited Paganini alongside Lo-Ho in enforcing a guaranty — but there the subsequent agreements expressly extended the original lease and the guaranty, and the guarantor signed both of them.

In S Klein Family L.L.C. v Deratafia (1st Dept 2025), the Court enforced a guaranty against rent increases effected by a lease modification agreement, citing Paganini with a "compare" signal — the distinction being that the modification there operated on a then-unexpired, existing lease, rather than replacing an expired one.

Read together, the principle is clear. The dividing line is not how broadly the guaranty is worded. It is whether the later document modified or extended a live lease or replaced an expired one.

Takeaways

For guarantors and their counsel:

• Start with the expiration date. If the guaranteed lease ran out and a genuinely new lease followed, the boilerplate about "any change whatsoever" may not save the landlord's claim.
• Look for a renewal option. Where the original lease contains none, there is nothing to "expressly extend or renew" — a point the Court emphasized here.
• Check what the later lease added. A materially new provision, particularly the very one the landlord sues on, undercuts any argument that the document is a mere continuation.
• Check whether the guarantor signed the later document. In Sasson, that signature was decisive.

For landlords and their counsel:

• Obtain a fresh guaranty with every new lease. This is the entire lesson of the case, and it costs nothing to do.
• If continuation is the intent, say so. Label renewal leases as renewals and have them expressly extend both the lease and the guaranty.
• Include a renewal or extension option in the original lease. Its absence limited the reach of the guaranty here.
• Do not rely on expansive boilerplate. Strict construction means broad recitals will not stretch a guaranty across a gap the documents themselves create.

A Note on Scope

Paganini affirmed a dismissal of third-party claims under the guaranties. It resolved the guarantors' exposure; it did not adjudicate the underlying dispute between the tenants and the landlord.

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Singh & Rani LLP represents landlords, tenants, and guarantors in lease enforcement, guaranty, and commercial and residential tenancy litigation in Supreme Court, Civil Court, Housing Court, and on appeal throughout New York City. Bikram Singh represented the plaintiffs-tenants and the third-party defendants-guarantors in Paganini v 40 W. 127th St., LLC. If you have been sued on a lease guaranty — or need one drafted so that it actually holds — we can review the documents and advise you.

Singh & Rani LLP 5 Penn Plaza, 19th Floor New York, NY 10001

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Attorney Advertising. This article is for general informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Prior results do not guarantee a similar outcome. Each matter turns on its own facts and applicable law.