Tag Archives: Joshua T. Reitzas

Pawling Public Radio: This Side of the Law:The Simple Truth, Dangers of Guaranteeing a Loan in the State of New York

This Side of the Law:The Simple Truth, Dangers of Guaranteeing a Loan in the State of New York

Pawling Public Radio: This Side of the Law: Berlandi Nussbaum & Reitzas LLP Hudson Valley | New York | Attorneys

By: Joshua T. Reitzas
Partner – Berlandi Nussbaum & Retizas LLP
April 28, 2013


Thinking about signing a personal guarantee? Perhaps on behalf of a corporation because the company cannot afford to stand on its own without your assistance?  Or on behalf of a family member whose credit is terrible?  Or even a friend? Well, definitely think again.

Last week, I had the unique privilege of actually arguing in Court the exact opposite sides of the same underlying issue: whether a guarantor has the right to assert a defense on a personal guarantee.  Two different clients, argued in two different types of courts (New York’s version of a “Business Court” and its regular Court), two different types of judges (different demeanor), and a couple of days apart.  In the end, there was only one decision rendered.  New York holds a guarantor strictly liable and defenses, almost always, will likely not be entertained.

What people really need to better understand is that signing personal guarantees may affect them both when the loan is considered in default, as well as when things are status quo (i.e. payments are being made timely).  In a default situation, it is more likely than not that a Lender will file suit.  Further, if the Guarantor sets forth a defense (i.e. answers the complaint), a summary judgment motion will presumably then be filed or at least one should be filed in my opinion (assuming the case was properly made out prior to suit).  This basically means that the Lender will ask the Court for a judgment immediately without having the expense of a trial.  All that would be needed is for the Lender to prove its prima facie case evidencing (a) that the loan was made, (b) that the unconditional and irrevocable Guarantee exists, and (c) the Borrower under the loan has defaulted (i.e. nobody paid the bill).

Assuming the Lender makes this showing, the burden would then shift to the party opposing the motion to produce evidentiary proof sufficient to establish the existence of material issues of fact remaining for trial. In sum, all a Lender needs to do is show the Court the underlying note (i.e. the actual loan document), the actual copy of the Guarantee (i.e. the physical document) and proof that the underlying loan was not paid back (i.e. account statements from the Lender’s financial records and supported by a proper affidavit).  This is a very tough obstacle for any Guarantor to overcome.  In fact, New York is so harsh that even if a Guarantor could assert a defense, it may be completely disregarded.

Now, keep in mind that Guarantees will often times include language in the document expressly mandating that Guarantors waive the right to any possible defense(s), offset(s), or counterclaim(s).  As mentioned earlier, even in the absence of specific waiver language, New York has held Guarantors liable.  So if you are thinking about signing that Guarantee, we suggest that you first analyze the gravity of the situation upon signing a Guaranty – do you really know what you are getting in for?

In one of our cases, the Guarantor purchased a $17,000,000 home and placed ownership into a corporate entity and then executed a Guarantee with respect to the mortgage.  We advised the Lender to pursue a money judgment and not to do a residential foreclose (so as to avoid any possible right to a modification of the loan that may exist otherwise). This is absolutely within the right of a Lender to select the type of remedy in New York.

Finally, Guarantors should be somewhat reticent about executing Guarantees, as the underlying obligation must be accounted for on all bank applications and/or personal financial statements.  Recently, we discovered that a client’s business credit line (which the client personally guaranteed) was not included on a recent bank loan application.  Thank goodness we caught it.  If we did not, the bank may have brought some serious allegations against our client for possible misrepresentation on the loan application.

We recommend that if you are thinking about signing a Guarantee, you first consult with an attorney to know exactly what you are getting in for.  And if you elect not to do so, we suggest reading this article again and again to make sure you completely understand what you may be faced with in the future.

Always feel free to call or write if you have any questions.

Berlandi Nussbaum & Retizas LLP

New York | Hudson Valley



Berlandi Nussbaum & Reitzas LLP

Hudson Valley | New York | Attorneys

Media & Entertainment


Joshua T. Reitzas
Phone: 212.804.6329 Ext 504
125 Park Avenue, 25th Floor, New York, NY 10017

Joshua T. Reitzas is a founding partner of the law firm Berlandi Nussbaum & Reitzas LLP (“BNR”).  Mr. Reitzas’ practice is primarily focused on representing companies, foundations and individuals in complex transactional matters, commercial litigation, and general corporate activities.   Mr. Reitzas has significant experience and expertise within the areas of media and entertainment, private equity and corporate workouts.

In addition, Mr. Reitzas provides special advisory services to certain clients within the media industry on corporate activities and new business ventures.    Clients seek to benefit from Mr. Reitzas’ transactional experiences, relationship network and legal perspective on matters such as branded entertainment, online advertising, and raising capital.  Mr. Reitzas’ advisory services enable his clients to navigate the evolving complex legal landscape on traditional business matters and to assist them in exploring and successfully launching new business opportunities.

Since 2005, Mr. Reitzas has been listed in the Marquis Who’s Who in American Law and Who’s Who in America publications and actively participates with the Hedge Fund and Private Equity Group at the Harvard Club of New York.

Prior to the establishment of BNR, Mr. Reitzas was a senior associate at the law firm of Jaffe & Asher, LLP.  He also has worked as an associate at Bear Stearns & Co., Inc. within the banking division and in the legal department of Rockefeller & Company, Inc.


J.D., Benjamin N. Cardozo School of Law, 2001
A.B., Bowdoin College, 1998


U.S. Supreme Court
U.S. District Courts for the Southern and Eastern Districts of New York
U.S. District Court of New Jersey
U.S. Court of Appeals for the 3rd Circuit
U.S. Court of Appeals for the 9th Circuit
U.S. Court of International Trade
New York
New Jersey


Committee Member, Richard A. Reitzas Athletic Endowment, The Wheeler School
Treasurer, Board of Directors, 200 East 16th St. Corporation
Member, New York State Bar Association
Member, Princeton Club of New York