Lease Guarantors Beware – Traps for the Unwary
The Third Circuit has just issued a non-precedential ruling under New Jersey law reminding us how naked a naked lease guarantor can be, and how careful we have to be when reviewing “form” lease guaranties. In G&S Livingston Realty, Inc. vs. CVS Pharmacy, Inc., CVS was the guarantor of a lease in which the retail tenant had gone into bankruptcy and rejected the lease. Of course, absent other information, CVS would stand behind the obligations of the bankrupt retail tenant. In this instance, the retail tenant had options and rights under the lease which CVS as an ordinary guarantor was not able to take advantage of.