For landlords who may be leasing to either commercial or residential tenants who are renting above their means, having a guarantor co-sign can be a great way to add some security to the arrangement. Having a financially sound guarantor ensures that the obligations arising under a lease can still be met if the tenant fails to pay. However, it’s important to note that in the event that the landlord decides to evict the tenant based on lack of payment or poor conduct, the landlord cannot recover from the lease guarantor in the New York summary eviction proceeding, but would have to commence a separate money damages action. If the landlord intends to have the right to recover against a guarantor in the summary proceeding, then that landlord needs to also provide that guarantor with some possessory interest in the property as well. In this blog post, we’ll discuss the role of guarantors, and when they are and are not liable.
How Article 7 Facilitates Prompt Eviction
While it is an unfortunate downside of being a landlord, evicting a non-paying tenant is often the only recourse. Sometimes enforcing the lease in this way is the only way to continue generating a steady cash flow.
A landlord’s eviction of a tenant in New York State is primarily achieved through a nonpayment or holdover summary proceeding under Article 7 of the Real Property Actions and Proceedings Law (“RPAPL”). These special proceedings enable a landlord petitioner to get a judgment and other relief much quicker than is normally possible under New York law. This accelerated relief is only available if the matter meets strict statutory criteria as outlined in Article 7 of the RPAPL.
What Are the Requirements for Eviction Under Article 7?
The primary relief that Article 7 provides is possession of real property. Specifically, the statute enables a landlord to regain possession of their property from a tenant. Whether a landlord is seeking to evict a tenant and regain possession of an apartment, house, commercial space or vacant land, and whether the landlord is seeking unpaid rent or to remedy objectionable conduct on the property – the common element in every case brought under Article 7 is that the landlord must be seeking possession of the property.
Why Can’t This Principle Be Applied to Guarantors?
In most cases, the guarantor is a parent, colleague or other family member, and is uninvolved with the lease. So, the guarantor would not be occupying or have a right to possession of the property. Since Article 7 actions deal primarily with possession (something which the guarantor often does not have), the remedy of possession is typically not available against a guarantor.
Can Guarantors Be Held Liable During an Eviction?
While the guarantor may be liable for damages under the lease agreement, if the guarantor doesn’t have possession, then these proceedings would need to take place in a separate forum. The summary eviction proceedings deal primarily with the tenant vacating the property, and with the financial issues as an ancillary matter only after it has been determined that the tenant had possession at the time the action was commenced.
How Can Landlords Prepare
In the real estate world, it’s important to be wary of the different ways tenant disputes can arise. For the landlord seeking to efficiently attain an eviction and money judgment against both the tenant and the guarantor in one proceeding, this can be a problem. There is a simple way that landlords can proactively prevent yourself from dealing with problems like this. Rather than having a guarantor simply co-sign, you can grant the guarantor equal rights to the property. So, if you find yourself in a situation where you are evicting a tenant due to lack of rent payment, you can simultaneously recover money damages from the guarantor in the same proceeding. By taking this precaution, the landlord can make the recovery of damages far more efficient.
Find an Experienced Real Estate Attorney
As a landlord, being prepared for potentially problematic situations with tenants comes with the territory. But, an experienced real estate attorney can streamline this process. Depending on the situation, Jim Clark provides landlords with valuable guidance about unique eviction options. Contact our office to discuss solutions to existing issues, or how you can proactively prevent issues in the future.
Jim Clark is a New York real estate attorney.
Legal disclaimer: IMPORTANT LEGAL NOTICE: This post is not legal advice does not create an attorney-client relationship. This and all posts on this website are intended as general information, and are provided for educational purposes of the public, not any specific individual. If you would like to obtain specific legal advice about this issue, please contact an attorney in your state. Mr. Clark is licensed to practice law in New York.