Guarantor Debt

Soot2006

So there no deed but possibly a deemed simple contract, which may have unfair terms in it.
This is all very messy. This is what courts are are, to decide who owes what in messy circumstances. Given the general messiness, I would want the arbitration of a court to determine this. SS appears to already have paid a solicitor over half the owed rental arrears, so poor decisions are being made in haste. Allow the court to decide, no need to panic pay anything PRIOR to court. At court, it will be important to defend why SS thinks he does NOT owe X, Y, or Z. If it turns out that he does owe X and/or Y and/or Z, then he will need to settle that bill. But LL really will not want to do this over and over, even if they win + might find out there is a more limited liability than they thought, or even none. 

Grumpy_chap

Flopfluppet said:

User1977: according to the solicitor,  the guarantee isn't valid due to incorrectly executed but the LL could argue successfully that it is therefore a simple contract and the terms of it upheld. So not valid in one way but it us in another. 
With regard to refurbishment,  LL is saying (so far verbally during call with SS) that he is going to make sure the whole flat is upgraded and refurbished so he can then sell it if SS doesnt pay up prior to court. The solicitor said in their letter SS is liable for costs ( but presumably only reasonable ones) and unpaid utilities, the deed says that apparently. 
TIW: the landlord has said why should he bother evicting tenant when most of the rent is paid via tenant benefits and SS can pay shortfall indefinitely.  Tenant spends lots of time on social media posting what he spends his money on and boasting about living on someone else's money. 
So below are a few key points from 'Pre-action protocol' letter: 
Heading of 'emotional manipulation and religious beliefs ' 
LL concerned that they are being emotionally manipulated by SS by him saying he is a Christian (that arose because early on LL asked SS to resort to violence to get tenant out for him and SS explained why he wouldn't do that) After phone calls to SS, LL questions SS honesty and agenda which LL thinks is guided towards self protection rather than honouring terms of guarantee.
Losses incurred:
£3k rent arrears, increased mortgage and insurance costs while planned sale of property delayed, subsequent increased debt costs affecting credit score, property damages necessitating replacement/repairs, additional security measure due to tenants illegal activities,  gas safety certificate renewal costs, loss of eventual sale value and increased capital gains tax, increased living/rental costs due to being unable to return to home. 
Then LL requests SS address above issues and removes tenant from the flat!!!! Letter ends saying if not dealt with in 14 days, legal action will result and financial compensation and a possession order against assets and future assets obtained. 
Quite stunned by what LL is trying to claim for plus still not evicting tenant but expecting SS to do it instead. The legal action will still only be against SS and no eviction started.
LL also complains that SS will not meet face to face. LL is in London SS on South Coast so not any easy meet up. SS also is wary because there is no benefit to meeting and anything can be sorted via email.
So I need to know please, how to respond to LL letter. Thank you. 

What on earth is the LL on about in that "pre-action protocol" letter?

Is it even a valid "Letter Before Action"?

The LL seems to have added a lot to the letter that simply muddies the waters - all the stuff about emotional manipulation, religious belief etc.

Then there is a lot of duplication of the costs / losses claimed by the LL:

• £3k rent arrears - OK, this is fundamentally what the guarantorship covers
• increased mortgage and insurance costs - NO, these are costs of business covered by the rent
• debt costs affecting credit score - NO, not the Tenant's (or Guarantor's) concern if the LL is overstretched financially
• property damages - these will be limited to the liability attached to the Tenant and no more, so the initial deposit plus whatever extra-over may be appropriate but not betterment
• additional security measures - what are these?
• tenant's illegal activities - if the LL believes the T is carrying on illegal activities, the Police would be the initial enforcement body.
• gas safety certificate - NO, this is a cost of business covered by the rent
• loss of sale value and increased CGT - NO, this is a risk and cost of business covered by the rent.  Linking the two is illogical - if the sale value has reduced, so has the CGT.  Any CGT will be covered by the sale value realised.
• increase living / rental costs due to being unable to return home - none of the concern of the Tenant.  Not consistent with the preceeding allegation (loss of sale) as the LL cannot sell the property and return to live there at the same time.

Then, the LL asks the Guarantor to arrange the T to vacate the flat.  The Guarantor has now grounds to issue eviction process and neither the LL or the Guarantor can use force to evict the T as that would be illegal.  If the LL wants the flat vacated so they can move back in to the property, why doesn't the LL simply start eviction process?

The most the Guarantor can do is suggest to the T that it might be time they move on and the LL is hoping to move back into the property.

Given that you have now engaged a Solicitor, it is probably best to run the letter past the Solicitor before responding.
Even if you don't get the Solicitor to send the response in their name, the Solicitor can give good guidance on the content of the response (even draft it) to be sent in the Guarantor's name.  There is also a need to ensure that nothing is done now that contradicts or restricts future steps that the Solicitor may need to take.

With all the apparent errors, the letter seems to be rather a bit of a bluff to me.  I am not qualified to take such a view though.

theartfullodger

Robbo66 said:

propertyrental said:

Dear Mr LL

I am writing to inform you that the guarantee agreement purported to exist supporting XYZ's tenancy at (address) is invalid.

The agreement was not Executed as a Deed. None of the relevant signitures were witnessed, and I was not provided with a copy of the associated tenancy agreement prior to being asked to sign.

Having taken advice, please be advised therefore that should any claim be made against me based on the purported guarantee agreement, I shall defend the claim, in court if necessary.

yours etc

Just a suggestion

Sorry but it doesn't have to be by way of a deed, An AST can have a guarantor clause included in the tenancy agreement and as long as the Guarantor has sight of the agreement and signs it then they become jointly liable for the rent and other terms with in that agreement.

The only time a Guarantee has to served as a deed is if the tenancy pre dates the guarantee agreement.

Appreciate your belief in this:  However the only way of establishing this (from THESE bits of paperwork - there's no general rule) would be by a judge when and if landlord takes alledged "guarantor" to court.  Until then "guarantor" should not respond to any requests for ££££££.

Artful, Landlord since 2000

Flopfluppet

Not possible to talk to tenant re leaving as he threatened SS with two hammers last time SS went round to see him about this. The only reason I can think of that LL won't evict, aside from the reason he has given in the past, is that he doesn't actually own the property but is subletting. Tenant is insistent thus is the case. SS did inform the solicitor of this but it wasn't addressed.  Do you think it's worth SS checking with land registry? I know there is a relatively small fee for that, but I presume if illegally subletting, SS can't be held as guarantor.  
This whole situation certainly is very messy and as SS isn't prepared to spend more money for the solicitor to deal with LL letter (£1200 + vat) I think he's just better waiting to be taken to court, as you all say.

theartfullodger

You do not have to own a property to be landlord.  Just need permission of owner to rent it out.

Quite common with many agents "renting" a property from owner, then agents rent it out to occupants   In that arrangement there are two landlords - owner with agent as tenant, then agent with occupants as tenants .  Entirely legal , quite common .

Actually think someone renting out without permission of owner may still he legally Landlord. (Happens too often with council and housing association property rented without knowledge of council or housing association.

Cloth_of_Gold

It costs £3 to check with the land registry. You can do it online in a few minutes.

Flopfluppet

Cloth_of_Gold said:

It costs £3 to check with the land registry. You can do it online in a few minutes.

Yes I've just seen that. I'm just trying to fathom why a LL wouldn't evict a tenant and expect the guarantor to do it instead?

Soot2006

Flopfluppet said:

I'm just trying to fathom why a LL wouldn't evict a tenant and expect the guarantor to do it instead?

Because SS has engaged with the situation and seems to be overinvolved, leading the LL to think they can get whatever they want from SS.

Grumpy_chap

Soot2006 said:

Because SS has engaged with the situation and seems to be overinvolved, leading the LL to think they can get whatever they want from SS.

Perhaps the LL can and is getting whatever they want from SS.
Perhaps the LL simply wants the SS to pay the rent.  All the other noise may well be just that.
Including the comments about suggesting the SS evicts the T. 
It may be the LL's way of saying they are satisfied with the situation, rent comes in, and no plans to evict anyone but if the SS believes he has grounds to evict, then go ahead.  The LL knows, of course, that SS cannot initiate the eviction.  

Flopfluppet

In consideration of the Landlord complying with the above request the Guarantor jointly and severally undertakes and agrees with the Landlord as follows:

 (1) The Tenant will pay the rent reserved under the Agreement on the days and in the Manner stated in the Agreement and will observe and perform the Terms and Conditions of the Agreement and the Guarantor will indemnify the Landlord on demand against all losses and expenses arising out of any default of the Tenant. In the case of Housing Benefit the liabilities of the Guarantor will also extend to cover any period whereby the benefit received may be suspended or ceased.

 (2) The liability of the Guarantor shall not in any way be limited or discharged by the Landlord giving the Tenant any extra time to pay the rent under the Agreement or giving any other indulgence to the Tenant or by the Landlord in any other way failing to enforce the payment of the rent or the performance of the terms and conditions of the Agreement.

 (3) The provisions of this indemnity shall apply to any increased level of rent paid by the Tenant and shall further apply to any continuation or extension renewal of the Tenancy created by the Agreement whether by operation of law or agreement between the Landlord and the Tenant.

 (4) The liabilities of the Guarantor will also extend to any costs involved under the tenant's obligations to maintain the property and leave the property in the same clean state or condition as at the commencement of the tenancy.

 (5) Any outstanding utilities and or authorities at the end of the tenancy will also be deemed the Guarantors liability under the terms of this deed.

 (6) As between the Landlord and the Guarantor the Guarantor shall be deemed to be a principal debtor.

 (7) The Guarantor fully understands that entering into this Deed of Guarantee confers legal obligations on the Guarantor and the Guarantor confirms that they have been advised by **************** to seek independent legal advice in respect of guarantor deed.

Obviously I've removed the letting agent name in paragraph 7 but as I read this I know for a fact the agent did not advise SS to seek independent advice before signing the deed, but they wouldn't,  would they? Any solicitor would advise he didn't sign it.
I'd appreciate your thoughts again, please.