Househunt Guarantor

davidmcn

eddddy wrote: »

Is that likely to be a legally enforceable debt?

I can't see how there is any binding agreement between the guarantor and his son's housemates about reimbursement in those circumstances.

(Assuming it's a joint tenancy) I think it's implied in joint & several liability situations that if someone has met an unfair proportion of the joint debt then they can seek recovery from their co-obligants (and similarly, the OP can seek recovery from their son if they have had to cover his debts as guarantor). What the OP can't do is seek recovery from the other guarantors, as the guarantee is only for the landlord's benefit.

mchale

OP as in post 2, also bear in mind you should have sighted the tenancy agreement before sighing any gua paperwork, if you haven't keep quiet this could work in yr favor.

steampowered

I strongly suspect that this guarantee agreement would therefore be invalid. You can safely sign it, knowing that if the landlord took you to court based on this document, you'd have a good chance of it being thrown out by a judge.

While you do need consideration to have a legally binding contract (while you don't for deeds), I would have thought the fact that the landlord is agreeing to grant a tenancy to the guarantor's son/daughter is sufficient consideration, as otherwise the parent would need to support the son/daughter. I think it would be very difficult to challenge the guarantee on this basis so the assumption must be that it is legally enforceable.

eddddy wrote: »

Is that likely to be a legally enforceable debt?

I can't see how there is any binding agreement between the guarantor and his son's housemates about reimbursement in those circumstances.

Although there is no contract between the joint tenants/joint guarantors, if one guarantor ends up being forced to pay the entire bill for all of the joint tenants, he/she could ask the other tenants/guarantors to pay a 'just and equitable' contribution towards that under the Civil Liability (Contribution) Act 1978.

G_M

steampowered wrote: »

While you do need consideration to have a legally binding contract (while you don't for deeds), I would have thought the fact that the landlord is agreeing to grant a tenancy to the guarantor's son/daughter is sufficient consideration, as otherwise the parent would need to support the son/daughter. I think it would be very difficult to challenge the guarantee on this basis so the assumption must be that it is legally enforceable.

I beg to differ. Agreement to grant a tenancy to a son does not constitute Consideration.

What the parent might or might not have done regarding supporting the son if the guarantee agreement did not exist is neither here nor there.

A guarantee agreement is not a contract and can only be enforced as a Deed. Courts have thrown out such agreements in the past (no, I'm not going to dig out a precedent!)

Having said that, judges can be fickle so it's impossible to state 100% catagorically that an agreement such as this would be thrown out, or accepted, by a particular court.

That's why the legal system requires an appeals process!

steampowered

G_M wrote: »

A guarantee agreement is not a contract and can only be enforced as a Deed. Courts have thrown out such agreements in the past (no, I'm not going to dig out a precedent!)

Guarantees are no different to any other contract. The only special requirement for guarantees is under the Statute of Frauds Act, which says that guarantees must be in a signed writing.

There is no legal requirement for guarantees to be executed as deeds. People often sign guarantees as deeds to avoid any argument about whether or not there is consideration, but using a deed is not legally required. Market practice is moving away from using deeds for guarantees.

There are several cases in which the higher courts have enforced guarantees which were not executed as deeds. This is all binding precedent on the lower courts. The most obvious example I can give you is the case of Golden Ocean v Salgaocar, a case decided by the Court of Appeal a few years ago. In this case a legally binding guarantee given by one company for the obligations of another company was found to arise from an exchange of emails. The director in question signing his name "Guy" on an email was enough. No deed in sight.

Details here.

It seems to me that the landlord's agreement to grant the Op's son a tenancy is perfectly good consideration, so I personally think the chance of the Op having the guarantee thrown out on this basis if he wanted to challenge it later would be very low.

dimbo61

Renting Student properties especially large HMO,s with 4/5/6/7/8 bedrooms nearly always involves Joint and several tenancies.
Most Landlord's and Lenders also require deed of guarantor forms completed by parents. Fact.
Not acting as a guarantor means your son/daughter will not be sharing with his uni mates in private housing for 2nd, 3rd or 4th year.
It gives a little more protection if things go wrong.

Ithaca

We had a thread recently where a parent of a student agreed with the landlord to pay three months' rent in advance on condition there was no requirement for a guarantor agreement (i.e. there was always at least three months rent "in the pot"). That takes the risk away from the landlord (i.e. if your son skips out on the tenancy the landlord is no out of pocket), and it takes the risk away from you being on the hook is any other joint tenants bail on their contract.

eddddy

dimbo61 wrote: »

Renting Student properties especially large HMO,s with 4/5/6/7/8 bedrooms nearly always involves Joint and several tenancies.
Most Landlord's and Lenders also require deed of guarantor forms completed by parents. Fact.

That is indeed a fact.

But the really worrying fact is that most student tenants and their guarantors don't understand the extent of their liability in these circumstances, and therefore do not exercise due diligence.

They should be looking at all the potential housemates and asking themselves "Do I trust you enough to guarantee your rent (and other liabilities)?"

NeilCr

eddddy wrote: »

That is indeed a fact.

But the really worrying fact is that most student tenants and their guarantors don't understand the extent of their liability in these circumstances, and therefore do not exercise due diligence.

They should be looking at all the potential housemates and asking themselves "Do I trust you enough to guarantee your rent (and other liabilities)?"

Quite. I volunteer in an advice agency and we get this a lot

"It's not fair" "Why should I pay" etc. And you have to point out to them what they have signed

Miss_Samantha

steampowered wrote: »

There are several cases in which the higher courts have enforced guarantees which were not executed as deeds. This is all binding precedent on the lower courts. The most obvious example I can give you is the case of Golden Ocean v Salgaocar, a case decided by the Court of Appeal a few years ago. In this case a legally binding guarantee given by one company for the obligations of another company was found to arise from an exchange of emails. The director in question signing his name "Guy" on an email was enough. No deed in sight.

The issue is that a guarantor does not usually get anything from the guarantee so there may not be a contract for lack of consideration. This is, I think, the main reason for a deed.

Then, in the case of an individual, the person may not understand what he is agreeing to, he might not be given time to consider it, and he might be pressure into signing.
Many things can derail the enforcement of the guarantee.