How to get out of being a guarantor?

tek-monkey

Possibly have a bit of a problem.

Back in June I agreed to be guarantor for my sister, she was on benefits and had to move house. She's crap with money, but what can ou do, she's family. Anyway, she's now started at uni, and was relying on the loan to pay the rent. The loan is late, will be another month they reckon, and I can't afford to sub her - the council were meant to be paying this! She's told my GF she wants me to cancel the DD to stall them, I am not happy about this. As I am trying to buy a house right now, this is a seriously bad time for her to screw up my credit rating.

Not got the form on me at the min, but anyone know an easy way out? She's had enough chances, already lost one place she owned, no way I want her screwing up my chance. May sound callous, but there is only so much you can do

Jowo_2

Does she have a 6 month tenancy agreement which means it is due to end next month? If so, perhaps you should persuade her to let the landlord know that she's not renewing the tenancy agreement and move out? Can she get accommodation at her university?

Or how do you feel about letting the landlord know that your sister is likely to default on her rent in the near future and suggest that he doesn't renew it and serves her notice (thereby limiting future losses for you).

Any chance perhaps your sister has received the LHA and squandered it and is fibbing to you its delayed? If not, she should apply for an interim housing benefit payment (also known as a payment on account) which she can do 14 days after application. LAs are required to do this, even if they haven't fully processed her application, as long as the applicant has provided sufficient information to support their claim.

"cancel the DD to stall them?" Stall who, don't understand what you mean. Do you mean that your sister is intending to cancel her standing order to pay her rent with the landlord?

Can't she arrange an overdraft at the bank or apply for the hardship fund at University rather than breach her tenancy agreement and send the landlord straight after you instead? What's wrong with her explaining to the landlord about the LHA/loan delays, apologising in advance for the next late payment of rent and promising him it's just a one-off - she should be communicating the problem with the landlord rather than running from her obligation.

You might be better off searching Landlordzone about your dilemma as they've definately had threads on this topic before. I recall something about a requirement for the guarantor to get a copy of the AST and questions about whether it was signed as a deed but don't understand the implications of this and how it can help you, sorry.

tek-monkey

Thanks a lot for the reply.

I have the documents at home, am not there tonight so can't check them. It is a 6 month contract, and I'm pretty sure it was June, so looks like its due to finish soon. From what I've read if it goes onto a rolling tenancy I'm screwed, I can only get out of it at the end of the 6 months and only then if she vacates the property.

Never being this stupid again. I only did this because she has 3 kids, didn't want to see them homeless, but I think I need to look out for my own interests now.

Jowo_2

tek-monkey,

I take it that was evicted from her previous property for rent arrears since you mentioned she would be homeless and local authorities tend to offer minimal assistance to those whose behaviour contributed to their eviction?

Though the following link is aimed at landlord's it does highlight some potential weaknesses that a reluctant guarantor could exploit - see the points to watch section.

http://www.landlordzone.co.uk/sureties_&_guarantees.htm

Having said that, it also says... - Guarantors - think carefully and seek legal advice before entering into long-term commitments

Jowo_2

By the way, if she defaults on 2 months rent and her landlord is aware that she's on LHA, he can apply to have the rent paid directly to him, therefore perhaps you can limit your exposure to this period only and get a refund from your sister once her LHA comes through (assuming she's not already received and spent it...)

Also, I believe that landlords can also get the LHA paid to them if the tenant has a history of rent arrears - is it possible the LA are already aware that she's been in arrears with her HB previously and may consent to direct payments to the LL?

tek-monkey

She spit with her OH, couldn't afford the rent anymore as the council would only pay £200 less. Ran up some arrears, had to get into somewhere cheaper as she couldn't make up the extra 200 each month she needed. Nobody round here takes DSS without a guarantor, thought I was doing the right thing. She is family after all

Seems I need to read the agreement ASAP, see if there is a route out before it goes periodic. There shouldn't have been an issue, council were paying it all, but she decided to go back into education which screwed that. All the loans are way behind, I work at a college so know a few people with the same problems, but the rent is due in a week and the loan will be another 4 they think.

Who the hell thinks a loan is a suitable way to pay your bills?!?!?!?

Anihilator

If your sister is genuinely entitled to a loan or housing benefit which hasnt been paid a hardship loan from the uni or prelim payment from LA is the way to go. If she doesnt get one or other I would suggest she is lying and has squandered the cash.

G_M

The only ways out are those suggested above along the lines of terminating the contract: either your sister giving notice or the LL doing so.
Or her finding the money elsewhere (Uni hardship, LHA, loan etc)

Failing that, well, the precise reason the LL asked for a guarantor was in case she decided to stop paying, or no longer could pay, her rent (or caused damage etc). You agreed to provide a guarantee to cover her liabilities in that scenario.
Now that that it is happening, you want to find a way to avoid your responsibility?

Suppose an insurance company offererd you car insurance 'just in case your car is stolen'. But then, when your car was stolen, the company said "Oh, we didn't think it would actually happen, can we get out of our obligation now?"

You'd be a bit miffed!!

ps - as someone who frequently posts advice on this forum you surprise me by getting yourself into this particular pickle!

Jowo_2

tek-monkey wrote: »

Who the hell thinks a loan is a suitable way to pay your bills?!?!?!?

A more critical response is - why is this any worse than the taxpayers and where is the father and his wallet in the instance where the shortfall in rent led almost led to his children's homelessness. Don't answer this, it's just me playing devil's advocate.

I did read somewhere that a guarantor can give reasonable notice to the landlord that they will not guarantee the rent past the original fixed term but I expect this depends on the wording of the document whose relevant clauses you can run past the experts at Landlordzone.

Offer to accompany your sister to the LHA office to sort out the non-payment and help her with the interim HB payment form. Any resistance to this could be interpreted as a sign that there is no actual outstanding payment due...

You need to impress upon your sister that she needs to resolve the late payment of the rent, communicating this to the landlord, in order to stave off yet another eviction for non or late payment of rent, instead of transferring the problem onto you, her benefactor, who put his credit record on the line and whose property purchase will be jeapardised by your kind actions to keep a roof over her children's head.

Ducking the issue with the landlord only makes the situation worse - why can't she sort out her own problems? Consider telling her that if she does not take steps to sort out the HB payment and communicate the impact of the late loan to the landlord, you will revoke your guarantee because she's not meeting her obligations to you or the landlord and needs to take responsibility or suffer the consequences without the safety net you offered and which she is abusing.

G_M

you will revoke your guarantee because she's not meeting her obligations

Hmmm...
"We only insure drivers who undertake never to make a claim"!
Or
"This policy will expire at midnight on (12 months date), or on the date you submit a claim, whichever is the sooner."

tek-monkey

Cheers for all the advice. I am not trying to duck out of it as such, I know what I signed, but I am wanting to reduce liability in light of my own financial situation changing. I only agreed to be gaurantor as she got HB that covered it, now she's gone into education this is no longer the case.

Had a think last night (wasn't exactly sleeping!), gonna call my sister after work and explain that if she misses this payment I shall push the LA to evict her. Everything I have read up on seems to say that as long as she stays there I am liable, and I have no way of removing her from the property myself. Seems that if you act as gaurantor and fall out with that person, you are screwed.

So, if her leaving the property is the only way to get myself out of this, that is what she must do. In a choice between me having a house and her having one, I have to choose me. 2 months notice means xmas, my family will love me!

So if it comes to it, what is the best way? Just call them and explain the situation? My gaurantor form seems a bit wrong, looks like a standard one, as I actually pay her rent and she puts it into my account, but the form says I must step in when she misses a payment? Also says I'm stuck even if they change the tenancy, so that route is out. If I say that as of x date they'll need to take me to court if they want any money, so I suggest they get shut of her prior to this?