Good guy clause - Wikipedia

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A Good guy clause, typically inserted in real estate sale contracts, is a limited personal guarantee. The distinction between a good guy clause and a personal guarantee is that in a good guy clause an individual’s personal liability ends when the space is vacated. Therefore, if a company dissolves and the space is vacated, the individual is absolved of any further responsibility.

Good guy clauses evolved as a compromise between landlords and tenants in New York City and are now a standard component of commercial leases in Manhattan.

Landlords were having problems with companies going bankrupt, defaulting on their rent payments, and not surrendering the spaces. The eviction process can be very extensive and typically takes about 6 months.

In order for a landlord to feel secure they had wanted either 6 months security deposit or a personal guarantee from the tenant.

A good guy clause basically states that if a company defaults, the individual that signed the good guy clause is responsible for the rent in between the default date and the date the space is vacated. This way, if the company goes bankrupt, the tenant still has an incentive to vacate the space, but is not responsible for the remainder of the lease if they cooperate and "be a good guy"..

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