Understanding the Good Guy Clause and NYC Office Leases

Inviting workspaces

Do you have questions about the Good Guy Clause? The GGC is an important part of Manhattan commercial lease negotiations.

Thomas Murtha, Partner at Capstone Realty, defines the GGC in informative detail and discusses how it can benefit both the tenant and the landlord.

What is the Good Guy Clause?

The purpose of the Good Guy Clause (GGC) is to help landlords avoid a lengthy and costly eviction process in the event that a tenant has ceased to pay rent, and to help tenants limit the amount of security deposit. The GGC is also known as “Good Guy Guarantee,” “Limited Personal Guarantee,” or simply “Guarantee.”

Although the language will vary from one GGC to another, the following requirements are typically found therein:

  1. Tenant must give notification to the landlord (notification period varies – typically three to six months)
  2. Tenant must deliver keys of the demised premises to the landlord or managing agent and surrender the demised premises to the landlord in broom clean condition and free of all subleases or licensees.
  3. Tenant must be up to date with all amounts due and payable under the lease as base rent or additional rent or other such charges.

THE SPIRIT OF THE GOOD GUY CLAUSE

The spirit of the Good Guy Clause is a Personal Guaranty from either the principal or officer of the corporate entity that signs the lease, thereby making him/her personally liable for the rent while the corporate entity occupies the space. In the event the tenant ceases to pay rent, for whatever reason, the tenant will be a “good guy” and will vacate the premises, effectively ending the personal liability.

The majority of landlords in Manhattan require a Good Guy Clause to be signed and will typically perform a credit check on the individual(s) that intends to sign the clause. The most important thing to do prior to signing the GGC is to make sure there is no “long tail” attached to it. Tenants must ensure that the Personal Guaranty terminates as soon as the demised premises are surrendered / returned to the landlord. Tenants also must be hyperaware of the notice period required to activate the rights of the GGC. For instance, some landlords will require that tenants give six months’ notice prior to exercising the Good Guy Clause. As a tenant, you ideally want to trim this notice period down to three months or less.

IN THE EVENT YOU DECIDE TO SELL YOUR BUSINESS

It is also important to ask for language to be inserted into the Good Guy Clause in the event you decide to sell your business. It seems the majority of business owners that I work with do not have an exit strategy in place with regards to the lease or an intention to sell their business any time soon, however, it is important to have the proper lease and GGC language in place in case the long term goals of the company change. Most landlords are fine with inserting language that states tenants have the right to transfer the Good Guy Clause to another individual of the same financial strength in the event the business is sold.

A majority of the office leases in Manhattan contain a Good Guy Clause.

WHEN THE GOOD GUY CLAUSE IS NOT SIGNED

In the instances where a Good Guy Clause is not signed:

  1. The principal of the corporate entity is not a U.S. citizen.
  2. The company is publically traded.
  3. The landlord does not require a GGC to be signed.
  4. The principal absolutely refused to sign the GGC, and in exchange, a higher security deposit is the result.

If you have questions about the GGC and the commercial real estate industry, then just ask us. Thomas Murtha will answer any questions that you may have. You can visit the GGC website and submit your inquiries.

http://goodguyclause.com/

View Beautiful Showroom Spaces in Manhattan

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Capstone Realty Advisors announces the launch of its new showroom website at http://www.nycshowroomspace.com/

If you are looking for a showroom, we will help you find a space that matches the creative vision of your business.

These showrooms offer you many advantages, including:

  • Prime locations in Manhattan
  • Creative and inspiring environments
  • Abundant natural light
  • Skylights, exposed brick, hardwood floors, high-end glass partitions, and lighting fixtures
  • Fall within your budget guidelines
  • Favorable lease terms that fall within your growth or exit strategy

To find your showroom, please contact us today for a free consultation with one of our agents.

For more information, please contact us at:

Joe McLaughlin

Tel: 212-239-8400

Email: jmclaughlin@capstoneny.com

Peter Gordon

Tel: 917.243.4228

Email: pgordon@capstoneny.com

To view some beautiful showroom spaces, please visit our website at:

http://www.nycshowroomspace.com/

A Day in the Life of a NYC Commercial Real Estate Agent

Jarad Winter (427x640) (285x403)Have you ever wondered what it’s like to be a commercial real estate agent in NYC? Jarad Winter, Associate Director at Capstone Realty Advisors, gives the lowdown on his life as a commercial real estate agent in one of the most competitive industries. Jarad’s no-holds-barred perspective uses wit and candor, as he takes us behind the scenes.

A day in the life of a NYC commercial real estate agent is an adrenaline rush. Here’s why.

I am approaching my third year in the business. The past three years have been like a roller coaster ride. It all began on my first day as a commercial real estate agent at Capstone Realty Advisors. Managing Partner and Founder, Joseph McLaughlin, gave me some advice on how to navigate the ups and downs of life as a NYC commercial real estate agent.

According to Joseph, succeeding as a commercial real estate agent requires perseverance, above anything else. One minute, you will be ecstatic because you just received a great phone call or email that gets you that much closer to completing a transaction.  The next moment, you will be incredibly disappointed about that phone call or email that has just delivered bad news.

Joseph’s words of advice were true to form. Being a commercial real estate agent has brought both challenges and rewards. But, that’s what makes it exciting. Its high moments, low moments, and everything in between – they’re all a part of my life at the Capstone office. And, I would have it no other way.

Diamond

The alarm goes off once, twice if I hit the snooze button, its loud beeping announcing another workday. There are many mornings when I wish I were more like the late Steve Jobs, who decided that he would only wear black turtlenecks and blue jeans to work. Smart man – by limiting his clothing options, he had one less decision to make during the day. If I showed up at the office in the same suit, shirt, tie, and shoes every single day, my fashionable colleagues would call me out on my “wear, wash and repeat” style.  Oh well, maybe in my next life.

While I walk to the Astoria Ditmars subway stop, I contemplate what I need to accomplish that particular day. It’s a time to multi-task, as I respond to emails using my iPhone. I continue to answer emails as I sit down on the N or Q train and begin the journey into Manhattan. Upon arriving at 34th Street Herald Square, I get out of the train and join the throng of New Yorkers on the streets of midtown Manhattan.

First things first, I immediately head to the deli to buy my morning coffee. That caffeine fix is my saving grace in the mornings. Armed with my cup of coffee, I walk into the Capstone office like a MLB player stepping onto the grass at the Yankee Stadium. It’s game time.

At my computer, I browse the new listings on CoStar with anticipation, hoping that the one space I’ve had my eye on has finally hit the market. I check my email again. Already, a handful of emails have seeped into my inbox. After promptly replying to the emails, I place 3-4 phone calls. Usually, the calls involve speaking with a client to confirm an appointment or discussing an offer with a building agent.

As the morning progresses, I open up my ACT! Database and perform my daily ritual of following up with clients. It’s a simple, yet important, step that involves checking in on clients, even if it’s to say a quick hello. Following up is essential to success as a commercial real estate agent. After all, it is better to be overly keen than not keen enough.

Since no two days are alike in this business, every morning is different. I usually start with an office space tour. I enjoy going on tours; they indicate that a client has placed their trust in me to find the best office space for their business. It’s a turning point in my business partnership with the client.

If I don’t have a tour planned, I canvass consistently. Cold calling and email blasts are a part of my canvassing strategies. By casting my net wide, I gather a few leads each day.

By the afternoon, I’ve literally worked up an appetite. I always try to eat a relatively healthy lunch, but hot and humid summer days call for a more hearty meal. For instance, after I go on a tour in 95 degree heat with 80% humidity, I’ll refuel by indulging in a large Italian Hero with hot peppers.

As I ramp up for the afternoon, I venture out to preview office spaces. Basically, previewing is researching. It involves taking photos of office spaces, jotting down notes of its features (natural light, anyone?), and drawing up detailed floor plans. After previewing an office, I am able to give my clients a first-hand perspective of the space, rather than simply spouting out facts and data that I read on CoStar. Clients always appreciate a “virtual” tour of an office space before they see it for themselves.

As the day draws to a close, I create a list of tasks for the following day.  Always looking ahead and having a proactive mindset is essential to survival in the industry. A commercial real estate agent should always think, ‘Ok, now what is the next step.’  In acronym speak, ATF (always thinking forward).

In this business, you have to roll with the punches. Some days are more hectic and stressful, while others bring a smile to my face. However, I enjoy facing the challenges. They make me a tougher and more resilient agent. After a day of bad news, I approach the following day with renewed vigor. I view every moment as an opportunity to maximize my potential as a commercial real estate agent.

As I’ve already mentioned, being a NYC commercial real estate agent is like riding a roller coaster. Even though it has its ups and downs, I enjoy every single moment of thrill.

Do you have questions or thoughts about the life of a NYC commercial real estate agent? Let us know what you think by leaving a comment.