Agreement of Guarantee - Help!

silk_2

Hi there,

I know I'm an idiot but I did the old mistake of signing something without full understanding it.

13 months ago I agreed to be a guarantor. I just had a call saying the tennant is £640 short on rent and I may be liable to pay it (if I can't get tennant to sort it out).

I didn't think I'd still be liable because 1, The original tennancy was fixed for 12 months and a new term has been signed for. 2, The rent has increased before that term, and also been signed for. In either case I signed no new paperwork.

However I got them to send the forms so I could double check this, and it looks like I've signed a pact with the devil! It's basically permanent and I'm liable for any rent increase without even having to be informed. How is that fair; do I not have any rights at all?

here is the exact wording (I had to type this manually thanks to new users being unable to link):

Form wrote:

2. The guarantee shall continue throughout the period that the Property are occupied by the tennant or any licensee and is not limited to the term specified in the agreement. This guarantee will continue throughout the tennancy or any extension renewal or re-grant continuation of the agreement whether for a further fixed term or periodic tenancy and whether it is created by agreement betweenthe landlord & the tennant or by operation of law or otherwise.

3. The guarantor will also be liable for any increase in rent agreed between the landord or any person active on his behalf and the tenant in accordance with the provisions of clause 2 of this agreement of guarantee. If the rent is increased by any other means the guarantor must be notified prior to the landlord and the tenant entering into any extension document or subsequent tenancy or the service of any notice under section 13 of the housing act 1988.

Am I really stuck in a neverending contract for the rest of my life where the rent could increase to like a gazzillion pounds and I'd still be liable?

Where does a guarantor stand if they can't actually afford an extra £840 a month on top of their own cost of living / rent payments? That's a worse case scenario if the tennant stops paying full rent permanently.

RAS

Which country are you in - England, Scotland?

Was the guarantee signed as a deed?

If so, you are indeed in very difficult situation as you are liable for the whole of the rent for the whole of the new term and the LL has no incentive to throw the tenant out at the end of that.

ruggedtoast

http://www.propertyinvestmentproject.co.uk/blog/tenant-guarantor-form/

You need to get your own solicitor to look at the legality of what you've signed. If the terms are unfair it may not be enforceable.

silk_2

RAS wrote: »

Which country are you in - England, Scotland?

Was the guarantee signed as a deed?

If so, you are indeed in very difficult situation as you are liable for the whole of the rent for the whole of the new term and the LL has no incentive to throw the tenant out at the end of that.

I'm in England.

I don't know what you mean by part of a deed, it was to secure her tennancy / rent.

silk_2

ruggedtoast wrote: »

link removed
You need to get your own solicitor to look at the legality of what you've signed. If the terms are unfair it may not be enforceable.

I read this page before posting here, hence thinking I'd be ok since they've not made me sign for the rent increase etc.

But the wording of the agreement suggests otherwise.

How would you define unfair terms?

G_M

The tenant was for some reason a bad 'risk' so the landlord did not want to take the risk of giving him a multi thousand pound property.

Perhaps the tenant has a history of county court judgements? or bankrupptcy? or an income income too low to justify commiting to the rent? or....or....

So you came along and said "Don't worry landlord - I know this tenant is a risk, but give him your multi-thousand pound property and I'll guarantee to make good any loss if he lets you down.

Now, the landlord would be stupid to say "OK for the beginning of his occupation only", so he says "OK, as long as you'll cover any losses as long as the dubious tenant is occupying my multi-thousand pound property".

Having said that, depending on the answers to RAS's questions above you might be able to wriggle out.

silk_2

G_M wrote: »

The tenant was for some reason a bad 'risk' so the landlord did not want to take the risk of giving him a multi thousand pound property.

Perhaps the tenant has a history of county court judgements? or bankrupptcy? or an income income too low to justify commiting to the rent? or....or....

So you came along and said "Don't worry landlord - I know this tenant is a risk, but give him your multi-thousand pound property and I'll guarantee to make good any loss if he lets you down.

Now, the landlord would be stupid to say "OK for the beginning of his occupation only", so he says "OK, as long as you'll cover any losses as long as the dubious tenant is occupying my multi-thousand pound property".

Having said that, depending on the answers to RAS's questions above you might be able to wriggle out.

I understand this, as I said I know I was an idiot just signing it, don't have to rub it in.

As it happens the only thing the tennant has against her is a poor credit rating and at the time she was job seeking on benefits. Now she is in full time work and very responsible. I trust her and have no doubts that this issue is nothing but a mistake but I'm still wanting to check up on where I stand on the whole guarantor thing.

G_M

Does the document you signed say it is a Deed?

Did someone independant witness you signing it, and then sign as a witness?

G_M

silk wrote: »

I understand this, as I said I know I was an idiot just signing it, don't have to rub it in.

Not rubbing it in. You asked :

Am I really stuck in a neverending contract for the rest of my life where the rent could increase to like a gazzillion pounds and I'd still be liable?

So I answered!

silk_2

G_M wrote: »

Does the document you signed say it is a Deed?

Did someone independant witness you signing it, and then sign as a witness?

I can't see the word deed anywhere.

It is headed "Agreement of Guarantee"

It was signed by a witness, however.

G_M wrote: »

Not rubbing it in. You asked :
So I answered!

Sorry, just a little stressed so taking things personally I guess..

G_M

silk wrote: »

I can't see the word deed anywhere. That might make it legally unenforcible.

It is headed "Agreement of Guarantee" That also might make it legally unenforcible.

It was signed by a witness, however. That might make it legally enforcible.

.

Here is a sample one:

http://www.stla.co.uk/Documents/Deed%20of%20Guarantee%20%202010.pdf

In the end the only way to determine if it is a valid Guarantee is to dispute it, go to court, and have a judge decide. Could go either way.