Acting as guarantor - is this fair

Jess

My husband has agreed to act as guarantor for my son who is renting a house in London with two friends. My son requires a guarantor because he is a student (we are paying the rent for him). We were happy to do this but have now been asked to sign a document saying that we are guarantor for all three tenants although if my son was earning they would not need a guarantor at all.

We are not happy with this arrangement! but have been told the only alternative is to pay my son's 12 months rent in advance.

Any suggestions about how we get round this?

anselld

You are guaranteeing sons obligations under the tenancy agreement.
If it is a "joint and several" liability contract then son is potentially liable for full rent. Therefore, so are you as his guarantor.

G_M

Jess wrote: »

..... we are guarantor for all three tenants although if my son was earning they would not need a guarantor at all.

No. You are being asked to guarantee whatever your son is liable for.

If (as is likely here) he is signing a 'joint and several' tenancy, then HE is liable for the full property rent (as are the other 2 joint tenants).

If he was working, he would still be liable for the full rent.

But yes - I appreciate your concern. It is a common problem but is based on the shared liability in joint/several tenancies rather than any inequity of guarantee agreements.

The alternatives are
* rent paid up front
* individual tenancies for each tenant

But the latter option would probobly turn the property into an HMO, which has significant implications (and costs) on the landlord.

silvercar

Have written into the guarantor document that the guarantee is limited to £xx less the rent paid by your son plus the cost of any damage.

Jess

Thanks for explaining it - it makes much more sense now. It doesn't seem quite fair but I understand why we are being asked to do it.

jjlandlord

I would only accept to pay rent upfront if all the joint tenants do the same.

Presumably your son's "share" of the rent (but that's just between him and his fellow joint-tenants) is 1/3 of the actual rent.
So "12 months rent in advance" is in fact only 4 months worth of rent, at which point your son will still be liable for any arrears if the others don't pay.

There are ways to limit your liability as a guarantor but you would need legal advice on how to draft it correctly.

payless

G_M wrote: »

But the latter option would probobly turn the property into an HMO, which has significant implications (and costs) on the landlord.

Wording on tenancy or splitting the tenancy makes no difference - it is either an hmo or not an hmo.
http://www.landlordlawblog.co.uk/2011/01/05/urban-myth-it-cant-be-an-hmo-if-all-the-tenants-sign-the-sam-tenancy-agreement/

G_M

silvercar wrote: »

Have written into the guarantor document that the guarantee is limited to £xx less the rent paid by your son plus the cost of any damage.

How does that work?

In a J&S tenancy, there is no "my rent/his rent".

If rent was £900 pm (nominally £300 each pm), what would the GA say?

silvercar

G_M wrote: »

How does that work?

In a J&S tenancy, there is no "my rent/his rent".

If rent was £900 pm (nominally £300 each pm), what would the GA say?

Assuming a 12 month tenancy, "This guarantee is limited to £3,600 less the total amount that has been received by son's name."

We had a similar situation and the landlord accepted this.

Cautious_Optimist

Is it common for parents to have to act as guarantors for students now?
What if the parents aren't homeowners etc?
When I was a student, I can't ever remember this being required.


The letting agents and LLs only asked for proof of student status and one months rent as deposit. So if the students thought they wouldn't get their deposit back, they just didn't pay their last months rent.


Only once was I asked for a "character" reference. My previous employer provided one.

G_M

silvercar wrote: »

Assuming a 12 month tenancy, "This guarantee is limited to £3,600 less the total amount that has been received by (from?)son's name."

We had a similar situation and the landlord accepted this.

So what happens after 12 months if/when a SPT arises?

What happens if damage costs = (say) £2500 and the rent arrears exceed the balance?

And this assumes the LL and guarantor can identify/agree what rent has come in from which tenant (which they don't usually monitor).

Or tenants have paid monthly rent via a single person?

This is a legal minefield which will benefit only the lawyers.....