In 501 Fifth Avenue Co., LLC v. Aslam, 136 A.D.3d 535 (1st Dept. 2016), the Appellate Division, First Department, reversed the trial court and awarded the landlord $71,542.46, plus statutory interest against the Guarantor on a commercial lease.
Specifically, the Court held that pursuant to the clear and unambiguous terms of the commercial lease and the unconditional guaranty of the tenant’s obligations under the lease, the landlord was entitled to recover from the guarantor, as demanded, the full amount of the accrued pre-vacatur arrears (in other words, rent without a setoff in the amount of the security deposit). The Court further held that the landlord had a right under the lease to determine when and how the security deposit would be applied towards the tenant’s outstanding lease obligations. In this case, landlord advised the Court that it intended to use the security deposit to cover post-vacatur damages, because the guaranty only covered the tenant’s lease obligations until the tenant vacated the premises.
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