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How do I stop being a guarantor?
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# 1
Piltdownman
Old 05-11-2011, 3:48 PM
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Default How do I stop being a guarantor?

I recently agreed to act as guarantor for my son when he completed an assured short-term tenancy agreement, now I'm beginning to regret this as I believe this type of tenancy has no time limit to it and depends on whether the LL or my son terminate it.
I thought I had signed up to being a guarantor for 12 months but I realise now that I have nothing in writing to confirm this and I'm afraid this could go on for years.
At the moment he is also having difficulty claiming any benefits having just come out of prison and I'm afraid I will be stuck paying his rent and being a guarantor for ever!!
I doubt if he will terminate the tenancy.
Can anyone please provide any crumb of comfort or advice?
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# 2
CLAPTON
Old 05-11-2011, 3:52 PM
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no there is no way of terminating being a guarantor except in accordance with whatever you signed.

check what you signed up to.
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# 3
BitterAndTwisted
Old 05-11-2011, 3:58 PM
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You are and will be a guarantor for the whole of the rent until the tenancy is ended. The only crumb of hope I can offer you is that in order to be enforceable it would have had to be signed as a Deed. Many, many agents and landlords get this wrong.
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# 4
Piltdownman
Old 05-11-2011, 4:16 PM
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Hi Bitter and Twisted!
Thanks for your reply. I have a Guarantor Agreement, basically a sheet of A4, with the terms and conditions, dated and signed by myself and a witness. How does this differ to a Deed? Thanks again.
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# 5
Piltdownman
Old 05-11-2011, 4:21 PM
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Actually I learned today from the Letting Agency that it is an Assured Short-Hold agreement!

Last edited by Piltdownman; 05-11-2011 at 4:25 PM. Reason: wrong word!
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# 6
clutton
Old 05-11-2011, 4:24 PM
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and so you agreed to back up your son, and presumably this was the basis on which the LL agreed to take him on as a benefit tenant, and now you want to back out - leaving the landlord to pick up the financial pieces ? ?

shame on you - and him just out of prison too....... He needs help not abandonment......

and yes... i am a landlord.... and yes ... i do take benefit tenants..... but i also want a guarantor....

the housing benefits systems is complex enough for tenants without guarantors who muck everyone about like this......

i suppose you realise that if you back out the LL may take your son to court and he will end up with a CCJ - which is what landlords want to avoid - which is why they ask for guarantors ?
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# 7
Piltdownman
Old 05-11-2011, 4:29 PM
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I agreed to 12 months as a guarantor (or at least I was given the impression of the agreement being for only 12 months), I don't have a problem with that but I need to know I can end this agreement after 12 months. I don't want to see the LL out of pocket in anyway, I'm quite happy to buy my way out of this!
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# 8
G_M
Old 05-11-2011, 4:34 PM
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What on earth did you believe you were doing when you signed up?

The landlord was understandably hesitant about handing over his multi-hundred thousand pound property to someone who has a criminal record and little income beyond benefits.

You provided the landlord with confidence by saying in effect "Don't worry - if in the future my criminal and penniless son either damages your property or stops paying rent, I will make good the loss. I am willing to do this because I trust my son (since I know him) to an extent which understandably you do not".

Having thus reassured the landlord, and persuaded him to hand over his multi-hundred-thousand pound property, you now wish to pull the rug from under him.

Sorry - not that easy.

It sounds like the guarantor agreement, however, may not have been created as a Deed, so there is a chance a judge might not enforce it. However the fact that it was witnessed (a key requirement) may well be enough to convince a judge that it is valid.

The only way to find out would be for your son to stop paying rent, the landlord take you to court as guarantor, and the judge to make a decision.
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# 9
BigAunty
Old 05-11-2011, 4:35 PM
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How old is your son and does he rent a room in a shared property or have a studio/1 bed place to himself?

Do you know how much the Local Housing Allowance is that he receives versus the rent that is due?

You can identify his LHA entitlements on the Direct Gov website or the local council website.

There are significant changes to the housing benefit system in place so it would be good for you to understand if he's in a property whose rent is greater than his LHA which means he could always struggle to top up the difference between his rent and LHA from his other benefit or employment income, for example.

My understanding is that a tenant can apply for an interim housing benefit payment after two weeks from the local council if they have submitted their application in full but the council has failed to process the claim in that period. This doesn't happen automatically, the tenant has to request it. The Shelter website will have more info on this, and the best way to avoid/manage rent arrears with landlords.

Last edited by BigAunty; 05-11-2011 at 4:38 PM.
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# 10
G_M
Old 05-11-2011, 4:35 PM
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Quote:
Originally Posted by Piltdownman View Post
I agreed to 12 months as a guarantor (or at least I was given the impression of the agreement being for only 12 months), I don't have a problem with that but I need to know I can end this agreement after 12 months. I don't want to see the LL out of pocket in anyway, I'm quite happy to buy my way out of this!
Most such guarantor agreements state that they last for the period of the tenancy which includes the initial fixed term, and subsequent fixed term, and any ongoing Periodic tenancy arising from the fixed term.

However you'd need to quote the wording on the document you signed before we can advise!
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# 11
BigAunty
Old 05-11-2011, 4:40 PM
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Quote:
Originally Posted by Piltdownman View Post
..I don't want to see the LL out of pocket in anyway, I'm quite happy to buy my way out of this!
But, at its heart, this is what being a guarantor is about - it's about minimising the risk of them being hit by a tenant's arrears, placing the risk on the guarantor.

I can't see a landlord voluntary releasing you from this, and if your son won't find a tenancy somewhere else, then your options are to see if the contract is valid, or hope that the landlord issues notice to your son.
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# 12
clutton
Old 05-11-2011, 5:03 PM
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i have to say i have respect for the way you have received some negative feedback about your behaviour... well done.....what age is your son ?
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# 13
Piltdownman
Old 05-11-2011, 5:04 PM
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Actually, he's not my son, he's my step-son. My wife signed the agreement!! You know the old mother-son thing?! Just glad our house is in my name only! Thanks to you all!
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# 14
hallowitch
Old 05-11-2011, 5:15 PM
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http://www.propertyinvestmentproject...uarantor-form/


How does a Guarantor stop being a Guarantor?

If the tenancy is for a fixed term (e.g 14th May 2007 – 14th May 2008), then the guarantee applies for the whole of the term and is not revocable during that term.

If the Tenancy Agreement becomes periodic, then the guarantor will STILL be the guarantor. However, when the fixed term is over and becomes periodic, the guarantor can opt out of the deal by writing to the landlord to terminate the agreement.

This is perfectly legal and has been tested in court. The guarantor should give “reasonable” written notice that he/she no longer wishes to be bound by the terms of the deed of guarantee (beyond the fixed term).


A fixed term contract is when two dates are specific in the Tenancy Agreement, in which the tenant has rights to live in the property. The agreement becomes periodic when the agreement expires, but tenant and landlord have agreed to continue the tenancy without signing new contracts. In that case, the previous contract rolls over and becomes periodic.


Note, the guarantee will be automatically canceled if the tenant signs a new tenancy agreement with the tenant, or if the terms of the existing tenancy agreement are changed E.g. if the rent is increased. In this case the landlord will need the guarantor to sign a new guarantee form. The Guarantor can only be held responsible for the tenants liability under the terms of the tenancy agreement the tenant has seen and agreed to. If these terms are changed, they have to approve this before they can be held liable under it.


If the a Guarantor requests to terminate the Guarantor agreement and the landlord agrees, then that can be taken as a valid termination. If this happens, get this from the landlord in writing for clarity.
A Guarantor agreement is also terminated in the sad incidence of a death, either of the tenant or the guarantor.
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# 15
DVardysShadow
Old 05-11-2011, 5:28 PM
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Quote:
Originally Posted by hallowitch View Post
http://www.propertyinvestmentproject...uarantor-form/


How does a Guarantor stop being a Guarantor?

If the tenancy is for a fixed term (e.g 14th May 2007 – 14th May 2008), then the guarantee applies for the whole of the term and is not revocable during that term.

If the Tenancy Agreement becomes periodic, then the guarantor will STILL be the guarantor. However, when the fixed term is over and becomes periodic, the guarantor can opt out of the deal by writing to the landlord to terminate the agreement.

This is perfectly legal and has been tested in court. The guarantor should give “reasonable” written notice that he/she no longer wishes to be bound by the terms of the deed of guarantee (beyond the fixed term).


A fixed term contract is when two dates are specific in the Tenancy Agreement, in which the tenant has rights to live in the property. The agreement becomes periodic when the agreement expires, but tenant and landlord have agreed to continue the tenancy without signing new contracts. In that case, the previous contract rolls over and becomes periodic.


Note, the guarantee will be automatically canceled if the tenant signs a new tenancy agreement with the tenant, or if the terms of the existing tenancy agreement are changed E.g. if the rent is increased. In this case the landlord will need the guarantor to sign a new guarantee form. The Guarantor can only be held responsible for the tenants liability under the terms of the tenancy agreement the tenant has seen and agreed to. If these terms are changed, they have to approve this before they can be held liable under it.


If the a Guarantor requests to terminate the Guarantor agreement and the landlord agrees, then that can be taken as a valid termination. If this happens, get this from the landlord in writing for clarity.
A Guarantor agreement is also terminated in the sad incidence of a death, either of the tenant or the guarantor.
I am just a tad suspicious, there is an american spelling lurking in there.

But the thrust of it looks reasonable - I don't think that it is equitable that a guarantor is bound beyond a fixed term into an open ended commitment with no means of termination - I would actually expect a court would be minded to uphold notice to quit a guarantee provided to LL had ample time to protect his interests [ie outside the assured term and allowing time to serve notice to quit].

So I am interested to see that apparently a court has upheld this. More details are needed!
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# 16
Piltdownman
Old 05-11-2011, 5:30 PM
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Actually I found this on property investment project site:
How does a Guarantor stop being a Guarantor?

If the tenancy is for a fixed term (e.g 14th May 2007 – 14th May 2008), then the guarantee applies for the whole of the term and is not revocable during that term. If the Tenancy Agreement becomes periodic, then the guarantor will STILL be the guarantor. However, when the fixed term is over and becomes periodic, the guarantor can opt out of the deal by writing to the landlord to terminate the agreement. This is perfectly legal and has been tested in court. The guarantor should give “reasonable” written notice that he/she no longer wishes to be bound by the terms of the deed of guarantee (beyond the fixed term).
A fixed term contract is when two dates are specific in the Tenancy Agreement, in which the tenant has rights to live in the property. The agreement becomes periodic when the agreement expires, but tenant and landlord have agreed to continue the tenancy without signing new contracts. In that case, the previous contract rolls over and becomes periodic.
Note, the guarantee will be automatically canceled if the tenant signs a new tenancy agreement with the tenant, or if the terms of the existing tenancy agreement are changed E.g. if the rent is increased. In this case the landlord will need the guarantor to sign a new guarantee form. The Guarantor can only be held responsible for the tenants liability under the terms of the tenancy agreement the tenant has seen and agreed to. If these terms are changed, they have to approve this before they can be held liable under it.
If the a Guarantor requests to terminate the Guarantor agreement and the landlord agrees, then that can be taken as a valid termination. If this happens, get this from the landlord in writing for clarity.
A Guarantor agreement is also terminated in the sad incidence of a death, either of the tenant or the guarantor.

Which seems to mean that after the tenancy agreement lapses in a year's time I can give the LL notice of my intention to stop being guarantor which seems fair enough to me!
My wife feels very silly about this and is still apologising to me!! Thanks
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# 17
Piltdownman
Old 05-11-2011, 5:51 PM
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Thanks, he's 20
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# 18
Hammyman
Old 05-11-2011, 6:40 PM
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The simple solution is to stop being the guarantor. This would have the unfortunate side effect of the tenant being served notice so you'd probably have to put him up.
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# 19
roger196
Old 05-11-2011, 6:51 PM
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You need to appreciate that if your wife terminates the guarantee the landlord is likely to evict her son. What will be the impact of this on their relationship? Has this been discussed with son? Is he likely to be able to pay the rent in future ie has he built up a satisfactory history of rental payments on time and in full.

Adequate notice ( say four months) needs to be given to the landlord of termination and wife will be liable for rent up to termination.

For these reasons, I always advise people giving guarantees to limit the time and the amount. Banks don't like this but they are the ones who see the account on a daily basis and can take remedial action before things spin totally out of control.
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# 20
PasturesNew
Old 05-11-2011, 6:59 PM
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At age 20 the LHA rate payable will be on the "shared" basis. To find out how much that is:

1] Go here and type in the postcode in the 2nd box: https://lha-direct.voa.gov.uk/search.aspx (ignore everything else on the page)
2] Press the orange SUBMIT button.
3] LHA rate he'd get is the one that appears for "Shared Accommodation Rate".
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