On October 23, 2024, Justice Patel of the New York County Commercial Division issued a decision in KTB CRE Debt Fund No. 11 v. Rosen, 2024 NY Slip Op. 33784(U), holding that an unconditional guaranty barred defendants from raising defenses, explaining:
In opposition, Defendants argue that: (1) trusts are legal fictions with no standing to sue; (2) Plaintiffs were not registered to do business in New York; (3) Plaintiffs did not register with the FDIC and/or the New York Department of Financial Services; (4) the affirmation of Claire Park is defective; and (5) the language of the loan documents refers to payment and performance as opposed to payment of money only.
However, in their opposition and cross-motion, Defendants’ glaringly fail to address the outcome-determinative language in the signed Guaranties that prevents Defendants from offering any of said defenses for consideration. Specifically prohibited in the plain language of the guaranties is any defense, other than actual, timely payment. Defendants do not refute that they have defaulted under the Guaranties.
Guaranties that contain language obligating the guarantor to payment without recourse to any defenses or counterclaims, i.e., guaranties that are absolute and unconditional, have been consistently upheld by New York courts. Further, unconditional guaranties for payment, which include a waiver of defenses, preclude guarantors from asserting a broad range of defenses.
(Internal quotations and citations omitted).