New York Appellate Court Upholds Findings of Springing Full-Recourse Liability of Guarantors Based Upon Failure to Pay Property Taxes

In a recent decision, New York’s Appellate Division, Second Department, held that guarantors under a “springing recourse guaranty” were liable for the full debt amount following the nonpayment of property taxes. Guarantors asserted that such terms constituted an unenforceable liquidated damages provision; however, the Court overruled these objections in a well-reasoned opinion.

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