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Startup Real Estate Tip: The 'Good Guy' Guaranty - Slow Down a Second


Congratulations. You have joined a startup and have shown both initiative and courage. Your new company has finally arrived at the point where you need more bodies and a place to put them. It’s time to move out of WeWork, Regus, or one of the other temporary set ups and get office space of your own, and the boss has put you in charge of that task.

You should find a real estate broker specializing in office space that will explain the market to you and show you prospective spaces. It’s a complicated process and a good broker and real estate lawyer are essential. The lease is going to be for a term of a few years and the landlord will be concerned with security for your performance – money that is held by the landlord in case the business defaults on its leasehold obligations. In New York City the landlord may also request a so-called “good guy” guaranty. This note is concerned with that aspect of security in a New York City deal.

Your broker will tell you that a good guy guaranty is a “standard” request in New York. That is accurate. Nonetheless, before you agree to have someone in your company sign one you should say, “Slow down a second.”