Hi Everyone ,
My tenants of a year all has been okay. They needed a guarentor because they didn’t match the salary
criteria and a CCJ. The guarantor now apparently wants to withdraw when the fixed term ends.
Their new tenancy will be periodic but is the guarantor liable till the tenants hand the notice in and leave or I gain possession by court. Or do I need the guarantor to sign a new doc ?
Hi Everyone ,
It depends what the guarantor agreement says. Most would still be liable during the SPT or CPT following a fixed/initial term, but probably wouldnt survive into a new fixed term tenancy. Check the wording of the agreement. You may also find that you need their agreement to increase the rent.
Unless its specificallt stated to the contrary in the tenancy agreement the Guarantor remains the Guarantor during the periodic period it defaults to. Its for this reason i wouldnt give the tenant a new tenancy agreement unless the Guarantor signs it too.
Under no circumstances id let the Guarantor off the hook.
This is the copy I have
The Guarantor is the person or persons responsible for discharging the Tenant’s obligations if the Tenant defaults whether the Landlord elects to pursue the Tenant or not.
“Joint and Several” means that the Guarantor will be liable with the Tenant to pay all Rent and any debt arising from any breach of the tenancy until all debt is paid in full.
15.1. In consideration of the Landlord agreeing at the request of the Guarantor to accept the Tenant as the Tenant of the Premises the Guarantor hereby covenants with the Landlord that the Tenant will pay the Rent and comply with all the Tenant’s obligations in this Agreement (including any variations to increase the Rent whether by agreement between the Landlord and the Tenant or pursuant to a notice given by the Landlord under section 13 of the Housing Act 1988). In any case of default by the Tenant, the Guarantor will pay the Landlord damages in respect of the Landlord’s reasonable losses incurred as a result of that default.
15.2. As between the Landlord and the Guarantor the Guarantor is a principal debtor and not merely a surety.
15.3. This Guarantee is irrevocable and shall continue beyond the Guarantor’s death or bankruptcy (falling as a liability on the estate) throughout the period that the Premises are occupied by the Tenant and is not limited to the Term of this agreement.
15.4. If the Tenant defaults during the initial Term or any extension, renewal or continuation of this agreement or the Tenant is declared bankrupt and the Tenant’s Trustee in Bankruptcy elects to disclaim the agreement then on written demand the Guarantor hereby agrees to pay damages to the Landlord for all losses, claims, liabilities, costs and expenses arising out of or in connection with that default or disclaimer or incurred by the Landlord in connection with the default or disclaimer.
15.5. It is hereby agreed that the Guarantor’s liability under this Clause will be joint and several with the Tenant which means that each will be responsible for complying with the Tenant’s obligations under this agreement both individually and together. The Landlord may seek to enforce these obligations and claim damages against the Tenant, the Guarantor, or both of them under these clauses. These obligations will not be cleared or affected by any act, neglect, leniency, or giving of time by the Landlord endeavouring to obtain payment or in the enforcement of the Tenant’s covenants. If the Tenant surrenders any part of the Premises the Guarantor’s liability will continue in respect of the part not surrendered. Any liability accumulated at the date of surrender will continue unaffected.
15.6. If requested by the Landlord, the Guarantor agrees to provide written confirmation of their current address at the start of the tenancy and to notify the Landlord in writing if they move to a new address in the course of the tenancy.
In my opinion its possible that the clause about it not being limited to the term of this agreement would be unenforceable as it seems too open ended. If a court struck it out, then that might affect its application during a statutory periodic tenancy.
Was this agreement executed as a deed with a witness? Was the guarantor given a copy of this agreement and the tenancy agreement well before signing? Was the guarantor advised to seek independent legal advice on the agreement and given the time to do so? These things can all trip up an otherwise valid guarantee.
The guarantor was a given a copy to read and sign. It was not witnessed and he wasn’t advised to seek legal advice, should he have been ? He is the tenants father and probably knows something I don’t.
Thank you for taking the time.
Im not sure the agreement would hold up as a contract and the guarantor could claim he easnt prpperly advised, so I would avoid trying to enforce it through the courts if you can.
okay thank you for your help
Thanks for your comments above. The guarantee has been drafted so as to cover any periodic contract which follows on from the fixed term. There isn’t any authority to suggest that the section 15.3 of the guarantee would be struck out. This section has intentionally been drafted broadly so as to cover continuations of the contract. This is also covered more explicitly in 15.4 anyway - which also covers any statutory periodic tenancy that follows on from the fixed term.
The contract does not have to be signed as a Deed and if the guarantor did not seek independent legal advice then this is not the Landlords fault and will not invalidate the guarantee. This is really a matter of contract interpretation and there is nothing to suggest that any of the clauses in the guarantee are invalid. It also up to the guarantor to seek their own independent advice if they so wish to do so.
Dan (OpenRent team)
Okay , so does this mean he is Guarantor till they hand in their notice.
They are guarantor until the Landlord releases them from their duties. The guarantor cannot unilaterally hand in their notice. However if the rent is increased you should seek their agreement to be on the safe side.
Dan (OpenRent team)
Opinion on this does seem to vary and I readily found 3 legal/landlord websites stating that signing as a deed is essential. However, I have since read a High Court judgement from 2020 which found that a guarantor agreement can be signed as a contract with the consideration of the tenant being allowed to rent, provided the guarantor agreement is signed before the tenancy agreement is signed.
I believe that for safety, the guarantor should always be advised to seek legal advice and given the time to do so or there is a risk of the guarantee not being upheld at court.
I am in similar situation and was rushed into signing as a guarantor without being advised to take legal advise. I even failed the reference check as part of guarantor application which landlord is suggesting was only for rent insurance purposes and it doesn’t rule me out as guarantor . I was made to sign the guarantee even when i was waiting reference outcome which I saw after signing the agreement although it came through before signing the contract but I wasn’t aware as reference outcome email was in spam folder. It was all done online when I received an email to sign as a guarantor. It was through openrent.
Then landlord emailed me further docs to be sent to him on his email to finalise tenancy which I never provided as I thought I failed the reference so I thought I can’t act as a guarantor. I never communicated further with landlord until court letter came of his claim against tenant which eventually piled up to £39000 rent for two years. It had been in court for two years and he is claiming £50000 legal costs on top of £39000 rent as he has been to different solicitors etc. apparently. He is pushing it more against me as he is not hopeful of getting anything from tenant. Trial is meant to take place soon. I am not sure if I will be held as guarantor and it is very stressful. Can you guys advice? Or share details of good legal advisors on guarantee contract. Will be much appreciated.
You weren’t made to sign anything. You had the contract in front of you, which you would have been able to read and sign if you agreed to its terms.
You also had the choice of seeking legal advice before signing it.
What were the “further docs” which were sent that you didn’t sign?
Based on what youve said, I think youre taking a big risk if youre making the landlord sue you to enforce the guarantee. Your points dont add up to a strong case and as youve discovered, the legal fees in such cases can really mount up. The court case could go either way, but unless youve got a really good lawyer arguing for you, I dont really fancy your chances.
Thanks Mark. He sent an email saying that he would need payslips, ID and probably proof of address to “Finalise” the tenancy and this was after signing the guarantee. Which I went back to original tenant and said that I would not provide as I was of the view that my reference had failed and I shouldn’t be a guarantor anyway. I didn’t not contact the landlord as I never had contracted him directly before as well.
Thanks David for your point of view on this. That’s why I asked do you know where I will be able to use good solicitor expert in this area (Guarantor cases) any link or contact will be appreciated. Thanks
Try JMW or Anthony Gold solicitors. They have PRS experts on staff.
Thanks David, which one of these two firms will you recommend the most so I can try to get in touch with that one first. What does PRS stands for? Thank you
Private Rental Sector PRS