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ALTHOUGH THE LEASE WAS ENTERED INTO BY THE LIMITED LIABILITY COMPANY (LLC) THE OWNERS OF THE LLC SIGNED A PARAGRAPH AGREEING TO GUARANTEE THE PAYMENT OF THE RENT; THE BREACH OF CONTRACT ACTION AGAINST THE INDIVIDUAL OWNERS SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that, although the lease was entered into by the limited liability company (LLC), the owners of the LLC signed as personal guarantors of the rent payments. Therefore the breach of contract action against the individual owners should not have been dismissed:

“An agent executing a contract on behalf of a disclosed principal ‘is not liable for a breach of the contract unless it clearly appears that he or she intended to bind himself or herself personally'” … . “[T]here [must be] clear and explicit evidence of the agent’s intention to substitute or superadd his [or her] personal liability for, or to, that of his [or her] principal” … . “There is great danger in allowing a single sentence in a long contract to bind individually a person who signs only as a corporate officer” … . A personal guaranty of a corporation’s obligation will be enforced against an individual where it “‘constitute[s] a deliberately stated, unambiguous, and separate expression personally obligating'” the individual under the contract … . * * *

Directly above the … signature lines was a paragraph stating that the parties agreed “[t]hat Roman and Solomon Davydov, are the owners of Tavak LLC, and they will act as personal guarantors for the payment of rent and any other[ ] costs, bills and fees and issues arising from the above enumerated items.” …

The clearly worded language of the guaranty clause made reference to Tavak and to each of the individual defendants by name, was contained in a short, two-page rider, and appeared directly above the rider’s signature lines, which the individual defendants signed without listing their corporate titles. 166-20 Union Turnpike, LLC v Tavak, LLC, 2025 NY Slip Op 05054, Second Dept 9-24-25

Practice Point: The owners of a limited liability company which enters a lease can agree to be personally liable for the debts of the LLC by guaranteeing the payment of rent.​

 

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