Guarantor Debt

Flopfluppet

Hello, I wasnt sure where to post this so I could be in the wrong place.
Before I ask for your help, I would like to just point out that my step son, who this post involves, knows he's been naive, foolish, unwise and all the rest! ( his dad has pointed this out to him now)
OK so my step son acted as guarantor for his employee on his tenancy agreement. The tenancy was initially for 12 months and SS assumed he would only be guarantor for the 12 months.  Had he have actually read what he was signing the small print effectively said he would be acting as guarantor the whole time the tenant lived at the property.  
The first 12 months have now passed with no issues. However this employee/tenant no longer works for SS as he went off the rails, got into drugs and ended up on benefits.  He gets housing benefit which the Landlord gets direct but the is a shortfall of a little over £100 per month, which he refuses to pay. So cutting a long story short, although the landlord is very reasonable with SS, the letting agent wants the shortfall (naturally) paying. There is no reason to evict the tenant although the LL has said they would consider saying they want the property back to live in and starting eviction proceedings because he has been told this but refuses to find somewhere else to live. 
SS has been to see tenant to talk it out and threatened  him with a hammer. Police were called, the drug use was also reported and so far the police have done nothing. 
SS said he hasn't taken legal advice because what he signed gives him no get out. I think he should, just in case.
In the end if the LL doesn't/can't evict him, which could take 12 months racking up more debt for SS, the tenant could stay there indefinitely having the shortfall in his rent paid by SS.  It could go on for years like this.
Please, do you have any advice?

user1977

Flopfluppet said:

SS said he hasn't taken legal advice because what he signed gives him no get out. I think he should, just in case.

Yes, because (anecdotally, based on previous threads here) many guarantees aren't properly set up in the first place. So no point worrying about the consequences until he knows that the guarantee is actually enforceable.

BoGoF

As above, get legal advice on how valid the agreement is but that comes at a cost.

The landlord may agree to terminate the agreement if the arrears are cleared so it's a case of legal fees vs clearing the debt and landlord agreeing to terminate.

DullGreyGuy

Flopfluppet said:

In the end if the LL doesn't/can't evict him, which could take 12 months racking up more debt for SS, the tenant could stay there indefinitely having the shortfall in his rent paid by SS.  It could go on for years like this.
Please, do you have any advice?

Because how a guarantor is typically setup there are a number of procedural steps that need to have happened properly (eg he'll have signed a deed which means his signature will have to have been witnessed by a witness that also signs the deed). Estate agents are often slapdash about these things and therefore they can potentially be challenged 

Peter999_2

DullGreyGuy said:

Flopfluppet said:

In the end if the LL doesn't/can't evict him, which could take 12 months racking up more debt for SS, the tenant could stay there indefinitely having the shortfall in his rent paid by SS.  It could go on for years like this.
Please, do you have any advice?

Because how a guarantor is typically setup there are a number of procedural steps that need to have happened properly (eg he'll have signed a deed which means his signature will have to have been witnessed by a witness that also signs the deed). Estate agents are often slapdash about these things and therefore they can potentially be challenged 

Is this correct?   When I signed as a guarantor for my daughter I did it all on-line and my signature was not witnessed by anyone.

propertyrental

As guarantor, you are not a party to any contract - you receive nothing ('consideration' is the legal term). So guarantee agreements have to be created as a 'Deed'. As such

* the guaarantor must know what the Deed involves - so must have been shown the tenancy agreement they are guaranteeing before they sign

* The deed should say it is a deed

* The signitures should be witnessed.

Having said that, some judges will enforce guarantee agreements that don't meet these strict legal criteria if the intention was clear to all parties - depends on the judge. But arguing that a guarantee agreement is invalid (as above) would make a judge stop and think.

Flopfluppet said:

...
OK so my step son acted as guarantor for his employee on his tenancy agreement. The tenancy was initially for 12 months and SS assumed he would only be guarantor for the 12 months.  Had he have actually read what he was signing the small print effectively said he would be acting as guarantor the whole time the tenant lived at the property. 

This is normal.

The first 12 months have now passed with no issues. However this employee/tenant no longer works for SS as he went off the rails, got into drugs and ended up on benefits.  He gets housing benefit which the Landlord gets direct but the is a shortfall of a little over £100 per month, which he refuses to pay. So cutting a long story short, although the landlord is very reasonable with SS, the letting agent wants the shortfall (naturally) paying. 

the tenancy is between the tenant and landlord. The agent just acts for the LL and has to do what the LL instructs, so it is the LL that matters here.

There is no reason to evict the tenant

Errr  £100 per month rent arrears building up.....?

although the LL has said they would consider saying they want the property back to live in and starting eviction proceedings 

LL could use S8 (rent arrears) or S21 (no reason needed)

because he has been told this but refuses to find somewhere else to live. well if  heb is evicted he'll have no choice

SS has been to see tenant to talk it out and threatened  him with a hammer.  Ooops! Silly SS! Police were called, the drug use was also reported and so far the police have done nothing. What, about SS threatening tenant wth hammer, or the drugs?
SS said he hasn't taken legal advice because what he signed gives him no get out. I think he should, just in case.

See above

In the end if the LL doesn't/can't evict him, which could take 12 months racking up more debt for SS, the tenant could stay there indefinitely having the shortfall in his rent paid by SS.  It could go on for years like this.
Please, do you have any advice?

SS should get the guarantee agreement checked.

Little else he can do - it's up to the LL whether to

• 
  
• do nothing and accept the shortfall
• evict the tenant for rentb arrears
• evict the tenant for... no reason needed, or
• sue SS for the arrears (and hope the guarantee agreement stands up in court)

https://www.davidandrew.co.uk/downloadable-forms/Sample-Deed-of-Guarantee.pdf

theartfullodger

Which country? (eg NI, Wales...)??

Law on guarantors varies 

But I agree, do nothing until court papers arrive - very likely a flaw in guarantee paperwork so unenforceable.

This thread a lesson on why to he v v careful entering into any agreement to be a guarantor...

Artful, Landlord since 2000

DullGreyGuy

Peter999_2 said:

DullGreyGuy said:

Flopfluppet said:

In the end if the LL doesn't/can't evict him, which could take 12 months racking up more debt for SS, the tenant could stay there indefinitely having the shortfall in his rent paid by SS.  It could go on for years like this.
Please, do you have any advice?

Because how a guarantor is typically setup there are a number of procedural steps that need to have happened properly (eg he'll have signed a deed which means his signature will have to have been witnessed by a witness that also signs the deed). Estate agents are often slapdash about these things and therefore they can potentially be challenged 

Is this correct?   When I signed as a guarantor for my daughter I did it all on-line and my signature was not witnessed by anyone.

In England and Wales yes... as per bullet 8 on https://lawcom.gov.uk/project/electronic-execution-of-documents/ the witness can equally sign it digitally but needs to have been present and attests to confirming they saw you sign the contract (digitally or physically)

newsgroupmonkey_

propertyrental said:

As guarantor, you are not a party to any contract - you receive nothing ('consideration' is the legal term). So guarantee agreements have to be created as a 'Deed'. As such

* the guaarantor must know what the Deed involves - so must have been shown the tenancy agreement they are guaranteeing before they sign

* The deed should say it is a deed

* The signitures should be witnessed.

Having said that, some judges will enforce guarantee agreements that don't meet these strict legal criteria if the intention was clear to all parties - depends on the judge. But arguing that a guarantee agreement is invalid (as above) would make a judge stop and think.

Flopfluppet said:

...
OK so my step son acted as guarantor for his employee on his tenancy agreement. The tenancy was initially for 12 months and SS assumed he would only be guarantor for the 12 months.  Had he have actually read what he was signing the small print effectively said he would be acting as guarantor the whole time the tenant lived at the property. 

This is normal.

The first 12 months have now passed with no issues. However this employee/tenant no longer works for SS as he went off the rails, got into drugs and ended up on benefits.  He gets housing benefit which the Landlord gets direct but the is a shortfall of a little over £100 per month, which he refuses to pay. So cutting a long story short, although the landlord is very reasonable with SS, the letting agent wants the shortfall (naturally) paying. 

the tenancy is between the tenant and landlord. The agent just acts for the LL and has to do what the LL instructs, so it is the LL that matters here.

There is no reason to evict the tenant

Errr  £100 per month rent arrears building up.....?

although the LL has said they would consider saying they want the property back to live in and starting eviction proceedings 

LL could use S8 (rent arrears) or S21 (no reason needed)

because he has been told this but refuses to find somewhere else to live. well if  heb is evicted he'll have no choice

SS has been to see tenant to talk it out and threatened  him with a hammer.  Ooops! Silly SS! Police were called, the drug use was also reported and so far the police have done nothing. What, about SS threatening tenant wth hammer, or the drugs?
SS said he hasn't taken legal advice because what he signed gives him no get out. I think he should, just in case.

See above

In the end if the LL doesn't/can't evict him, which could take 12 months racking up more debt for SS, the tenant could stay there indefinitely having the shortfall in his rent paid by SS.  It could go on for years like this.
Please, do you have any advice?

SS should get the guarantee agreement checked.

Little else he can do - it's up to the LL whether to

• 
  
• do nothing and accept the shortfall
• evict the tenant for rentb arrears
• evict the tenant for... no reason needed, or
• sue SS for the arrears (and hope the guarantee agreement stands up in court)

https://www.davidandrew.co.uk/downloadable-forms/Sample-Deed-of-Guarantee.pdf

I don't think the SS threatened the tenant with a hammer, I think it was the other way around.

And surely, if the tenant isn't paying, then it should be up to the landlord to minimise the cost to the guarantor.

I mean, if they didn't, the guarantor could be expected to pay 100% of the rent for ever. The guarantor can't evict the tenant and whilst they could countersue, the tenant doesn't have any money.

user1977

newsgroupmonkey_ said:

propertyrental said:

As guarantor, you are not a party to any contract - you receive nothing ('consideration' is the legal term). So guarantee agreements have to be created as a 'Deed'. As such

* the guaarantor must know what the Deed involves - so must have been shown the tenancy agreement they are guaranteeing before they sign

* The deed should say it is a deed

* The signitures should be witnessed.

Having said that, some judges will enforce guarantee agreements that don't meet these strict legal criteria if the intention was clear to all parties - depends on the judge. But arguing that a guarantee agreement is invalid (as above) would make a judge stop and think.

Flopfluppet said:

...
OK so my step son acted as guarantor for his employee on his tenancy agreement. The tenancy was initially for 12 months and SS assumed he would only be guarantor for the 12 months.  Had he have actually read what he was signing the small print effectively said he would be acting as guarantor the whole time the tenant lived at the property. 

This is normal.

The first 12 months have now passed with no issues. However this employee/tenant no longer works for SS as he went off the rails, got into drugs and ended up on benefits.  He gets housing benefit which the Landlord gets direct but the is a shortfall of a little over £100 per month, which he refuses to pay. So cutting a long story short, although the landlord is very reasonable with SS, the letting agent wants the shortfall (naturally) paying. 

the tenancy is between the tenant and landlord. The agent just acts for the LL and has to do what the LL instructs, so it is the LL that matters here.

There is no reason to evict the tenant

Errr  £100 per month rent arrears building up.....?

although the LL has said they would consider saying they want the property back to live in and starting eviction proceedings 

LL could use S8 (rent arrears) or S21 (no reason needed)

because he has been told this but refuses to find somewhere else to live. well if  heb is evicted he'll have no choice

SS has been to see tenant to talk it out and threatened  him with a hammer.  Ooops! Silly SS! Police were called, the drug use was also reported and so far the police have done nothing. What, about SS threatening tenant wth hammer, or the drugs?
SS said he hasn't taken legal advice because what he signed gives him no get out. I think he should, just in case.

See above

In the end if the LL doesn't/can't evict him, which could take 12 months racking up more debt for SS, the tenant could stay there indefinitely having the shortfall in his rent paid by SS.  It could go on for years like this.
Please, do you have any advice?

SS should get the guarantee agreement checked.

Little else he can do - it's up to the LL whether to

• 
  
• do nothing and accept the shortfall
• evict the tenant for rentb arrears
• evict the tenant for... no reason needed, or
• sue SS for the arrears (and hope the guarantee agreement stands up in court)

https://www.davidandrew.co.uk/downloadable-forms/Sample-Deed-of-Guarantee.pdf

And surely, if the tenant isn't paying, then it should be up to the landlord to minimise the cost to the guarantor.

I mean, if they didn't, the guarantor could be expected to pay 100% of the rent for ever. The guarantor can't evict the tenant and whilst they could countersue, the tenant doesn't have any money.

I'm not aware of there being any general obligation on the landlord to do so.

(though obviously, they might choose to take steps to end the tenancy)

Grumpy_chap

newsgroupmonkey_ said:

And surely, if the tenant isn't paying, then it should be up to the landlord to minimise the cost to the guarantor.

Why?

The whole idea of the Guarantor is that the LL has assessed that they would not provide the Tenancy to the T as the T has not demonstrated sufficient income to meet the rent on an ongoing basis.  The T is only able to secure the Tenancy by providing the LL with the Guarantor to underwrite the payments and the LL assess the Guarantor has the financial resilience to honour this commitment.

The Guarantor owes a duty of care to the LL.
I can't see that the LL owes a duty of care to the Guarantor, not beyond providing the T with the property on the proper terms.