In the case of Truist Equipment Finance Corp. v. Tebele, 2025 NY Slip Op 35031(U), the New York court held that a forbearance agreement, entered into between a lender and a borrower regarding the borrower’s pre-existing loan, did not transform the Guaranty (personal guarantee) into an instrument outside the scope of CPLR 3213 (which governs instruments entered into for the payment of money only).
Instead, the forbearance agreement simply deferred the borrower’s obligations under the Guaranty. Accordingly, the court held in favor of the lender’s motion for summary judgment in lieu of complaint.
Interestingly, during oral arguments, the court noted a public policy reason to support its holding: if a forbearance agreement transforms a personal guarantee such that it no longer qualifies as an instrument solely for the payment of money pursuant to CPLR 3213, such a ruling would create a potentially significant disincentive for lenders to sign forbearance agreements, which are a useful and common way to forestall or eliminate the need for litigation. There is no support in the statute or the case law for such a result.