rent guarantor for sister

eddddy

hungry_hippo said:

Just need to know as I'm moving house next year and I know it would affect my mortgage affordability and I'd have to declare it, if I was still bound by the guarantor agreement I signed under the original tenancy agreement
 
 

Maybe ask on the Mortgages board whether that's something you have to declare with a mortgage application.

I'm not sure that you have to declare liabilities that you might or might not have at some point in the future. I don't think mortgage lenders ask that kind of question.

If they did ask about liabilities that you might or might not have in the future, the list could be very long. And how would they assess the risk of your sister not paying her rent? (Is it a 1% risk or a 90% risk?)

(And FWIW, the mortgage lender will probably have no way of knowing about the guarantor agreement - unless you tell them, or you tell your solicitor.)



But you have to make your own decision about whether you want the risk of taking on a mortgage, if the guarantor agreement is still in place.

propertyrental

What a wierd contract!

1) The rent review clause is unenforceable, since it is not clear enough how much the increase will be or on what basis it will be decided.: "in line with local rents" is far too vague to be enforceable.

2) the Break Clause is meaningless since "not before the end of the Fixed Element ". But that's exactly what Break Clauses are - an opportunity to 'break' the fixed term (fixed element). Thereafter either side can give notice to end the periodic without any need for a Break Clause!

3) the guarantor agreement is probably unenforceable too. "In consideration for the Landlord granting the Tenant a tenancy". 'Consideration' is a legal concept used in contracts, and requires each side to give the other something. In this case the LL is granting the guarantor.... nothing. So there is no enforceable contract between LL and guarantor. The guarantor receives no 'consideration'.

To be valid, the guarantee agreement would need to be a Deed, and Executed as such (as opposed to a contract). But nowhere is the word 'Deed' used, nor does there appear to be 'Execution'. To be a valid deed, the signatories would also need to be witnessed. Were they?

So I suspect that both guarantors are 'off the hook' and could claim in court (if it came to that) that no valid guarantee exists.

Having said that, courts can sometimes make strange decisions and a judge might enforce despite the GA being invalid

But all in all, whether claiming that

* the original (jointly guaranteed) tenancy is now replaced by the sole guarantee tenancy, or
* both guarantees are invalid (not executed as Deeds)

there is no benefit at this stage in raising any issue.

Wait till the tenant defaults and the LL tries to claim off one or both guarantors and then raise objections!

hungry_hippo

propertyrental said:

What a wierd contract!

1) The rent review clause is unenforceable, since it is not clear enough how much the increase will be or on what basis it will be decided.: "in line with local rents" is far too vague to be enforceable.

2) the Break Clause is meaningless since "not before the end of the Fixed Element ". But that's exactly what Break Clauses are - an opportunity to 'break' the fixed term (fixed element). Thereafter either side can give notice to end the periodic without any need for a Break Clause!

3) the guarantor agreement is probably unenforceable too. "In consideration for the Landlord granting the Tenant a tenancy". 'Consideration' is a legal concept used in contracts, and requires each side to give the other something. In this case the LL is granting the guarantor.... nothing. So there is no enforceable contract between LL and guarantor. The guarantor receives no 'consideration'.

To be valid, the guarantee agreement would need to be a Deed, and Executed as such (as opposed to a contract). But nowhere is the word 'Deed' used, nor does there appear to be 'Execution'. To be a valid deed, the signatories would also need to be witnessed. Were they?

So I suspect that both guarantors are 'off the hook' and could claim in court (if it came to that) that no valid guarantee exists.

Having said that, courts can sometimes make strange decisions and a judge might enforce despite the GA being invalid

But all in all, whether claiming that

* the original (jointly guaranteed) tenancy is now replaced by the sole guarantee tenancy, or
* both guarantees are invalid (not executed as Deeds)

there is no benefit at this stage in raising any issue.

Wait till the tenant defaults and the LL tries to claim off one or both guarantors and then raise objections!

thanks, no the guarantor signatures weren't witnessed, I just had an e-sign email. 

The tenant won't default because my mum actually pays part of her rent and it comes out of my mum's bank account (my sister has schizophrenia so can sometimes get a bit confused by financial matters or forget to do things, that's why my mum pays though my sister provides her with 2/3 from her benefits and work ). I was concerned about still being the guarantor when my sister was in a 12m contract if my mum passed away for example (she's late 70s, has some health issues), then as second guarantor I'd have to help my sister with the rent which I couldn't really afford, and then we couldn't give 2 months notice if she was still signed up to a 12 month contract - so if my sister couldn't afford it on her own and if the landlord didn't agree to let her leave the contract,  we'd have had to pay the rent for the rest of the contract then my sister move out (most likely into my mum's where she'd have inherited 1/3 of a flat, being 1 of 3 siblings, and wouldn't have to pay rent living there)