questions on being a guarantor

GDB2222

I see no reason why you should give an unlimited guarantee. If you limit the amount to say £5k, and the landlord accepts that, you may feel that you can sign it. But, an unlimited guarantee is just not something anyone should sign. 

AdrianC

GDB2222 said:

I see no reason why you should give an unlimited guarantee. If you limit the amount to say £5k, and the landlord accepts that, you may feel that you can sign it. But, an unlimited guarantee is just not something anyone should sign. 

There is no compulsion on anybody to sign a deed of guarantee.

Equally, there is no compulsion on the landlord to accept a tenant without a guarantor...

GDB2222

AdrianC said:

GDB2222 said:

I see no reason why you should give an unlimited guarantee. If you limit the amount to say £5k, and the landlord accepts that, you may feel that you can sign it. But, an unlimited guarantee is just not something anyone should sign. 

There is no compulsion on anybody to sign a deed of guarantee.

Equally, there is no compulsion on the landlord to accept a tenant without a guarantor...

Which is why I suggested that a reasonable compromise is to limit the guarantee. 

I understand that for student HMOs it is possible to have a guarantee that is limited to just a share of the rent, rather than accepting liability for all the tenants. 

As you say, the landlord will not necessarily accept that, but that doesn’t mean that the op should accept a silly liability.

GDB2222

This is an interesting link about limiting the guarantee to a particular person's share.

https://www.property118.com/student-guarantee-with-limited-liability/

user1977

GrumpyDil said:

user1977 said:

Also bear in mind that your guarantee (even if it's never called upon) is a potential liability which is likely to be taken into account when you apply for lending etc.

I can't ever recall having been asked that question on any previous mortgage or loan application. Genuine question is this really true because if you answer no there is no way of verifying the existence or otherwise of any guarantee you gave signed? 

It depends exactly what questions you're asked, of course, but it's just as much a liability as being liable for the rent by being a joint tenant. Whether or not it's "verifiable" only matters if you're considering providing a fraudulent answer, surely? It's no more or less verifiable than the tenancy agreement.

eddddy

Presumably, the arrangement is that, if you have to pay out any money as guarantor, your friend (the student's parent) will repay you.

So it's really a matter of how much you trust your friend to make any repayment. If you want to make that arrangement with your friend legally enforceable (i.e. so you can sue the friend in court), you and the friend would need to sign an additional deed between you.

It could also get a bit messy - for example, if the LL is telling you to pay £1000 - but your friend is disputing it's owed and telling you not to pay. It's you that might get hounded by debt collectors, and maybe taken to court - not your friend.





But back to your main question - you need to read the wording of the AST to see what the friend's daughter's potential liabilities are (e.g. are they joint and several?). I suspect that the guarantor deed says you will take on all those liabilities.

All the tenants will probably have guarantors, so I guess the LL will go after whichever guarantor seems easiest.

Many parents of students are outraged by the terms of these guarantor agreements, but end up signing them - because otherwise the students won't find anywhere to live.



FWIW, when signing a similar deed, I wrote something like this just above the signature space "Liability for Emily Smith's share of rent only.". The letting agent didn't challenge it. I've no idea if it was enforceable in court (or whether it made the whole deed invalid).  But it made me feel a bit better!

GDB2222

What happens if one of the co-tenants deliberately sets fire to the place and causes much damage? The landlord's insurance may not cover arson. 

MaryNB

Bear in mind if they stay in the property over the summer and then renew for the following year you may still be liable. The guarantor's liability can continue as long as the tenant is in the property. A few guarantors on this forum incorrectly assumed their liability ended after the fixed term or on renewal of the tenancy and were stung with a significant bill after the tenants stopped paying rent for a long period of time. 

eddddy

GDB2222 said:

What happens if one of the co-tenants deliberately sets fire to the place and causes much damage? The landlord's insurance may not cover arson. 

If the tenants have joint and several liability for damage - the LL can claim damages from any of the tenants.

If any of the tenants have guarantors - the LL can choose to claim damages from their guarantors.

In reality, ultimately, I suspect the LL might assess which tenants and/or guarantors would be the easiest to get the money from and go after them. (e.g. use property price searches to try to work out who is wealthiest.)


I believe that whoever ends up paying out has the right to sue whoever was responsible for the damage - i.e. the tenant who's guarantor had to pay out can sue the arsonist tenant. Assuming they have any assets.

user1977

eddddy said:

GDB2222 said:

What happens if one of the co-tenants deliberately sets fire to the place and causes much damage? The landlord's insurance may not cover arson. 

If the tenants have joint and several liability for damage - the LL can claim damages from any of the tenants.

If any of the tenants have guarantors - the LL can choose to claim damages from their guarantors.

In reality, ultimately, I suspect the LL might assess which tenants and/or guarantors would be the easiest to get the money from and go after them. (e.g. use property price searches to try to work out who is wealthiest.)


I believe that whoever ends up paying out has the right to sue whoever was responsible for the damage - i.e. the tenant who's guarantor had to pay out can sue the arsonist tenant. Assuming they have any assets.

And even if insurance does pay out, that just means the insurers then have the right to recover the money.