Guarantors Weren't Liable After Original Lease Ended

A tenant's two officers signed a lease as the tenant and, personally, as guarantors. The tenant renewed its lease and signed a lease addendum that “incorporated by reference” all terms of the original lease. But the addendum required only that the two officers sign as officers—not personally, as guarantors. When the tenant told the owner that it wouldn't pay its rent, the owner sued the two officers, as guarantors, for payment. The owner claimed that the two officers were liable as guarantors during the renewal period because the guaranty page of the original lease was “incorporated by reference” into the addendum. But the two officers argued that their guaranty applied only to the original lease.

An Ohio appeals court ruled that the two officers weren't liable as guarantors after the original lease ended. The court noted that the lease and addendum didn't address whether the two officers would remain liable as guarantors after the original lease ended. Relying on the “incorporation by reference” language in the addendum wasn't good enough, said the court. Had the owner wanted the two officers to remain liable as guarantors during the renewal period, it should have included language to that effect in the addendum [Fairview Realty Investors, Ltd. v. Seaair, Inc.].