Rental guarantor

doodling

Hi,

ThisIsWeird said:

This guarantor malarkey seems deeply flawed.
Is it really the case, for example, that a tenant being 'guarantored' could simply choose to stop paying their rent, in the knowledge that their guarantor would need to pick up the bill? Indefinitely?! 
What's to prevent this from happening, say by a feckless child?! If the tenant can clearly afford to pay the rent, so is simply taking advantage to line their own pockets, can the guarantor escape their liability in some way?

There is nothing stopping the guarantor suing the tenant for their losses although whether that is worthwhile is debatable if they don't have any money.

I wouldn't agree to be a guarantor unless either the liability was capped or the landlord agreed that they would take all reasonable steps to end the tenancy when instructed by the guarantor.

DullGreyGuy

ThisIsWeird said:

This guarantor malarkey seems deeply flawed.
Is it really the case, for example, that a tenant being 'guarantored' could simply choose to stop paying their rent, in the knowledge that their guarantor would need to pick up the bill? Indefinitely?! 
What's to prevent this from happening, say by a feckless child?! If the tenant can clearly afford to pay the rent, so is simply taking advantage to line their own pockets, can the guarantor escape their liability in some way?

If they have a feckless child, part may say what happened to the parenting that made them grow up like that and secondly we are talking adults here not babies and if your parent has failed and raised a feckless kid then refuse to be a guarantor 

Its the same as being joint on any form of finance, you are signing up for the full amount and if you dont want to pay it then dont sign up to it. The only way to escape it would be to default on the payments and wait for the landlord to evict your kid. 

What's more silly is guarantor loans where a bad credit person gets a 40% APR loan which a good credit person guarantees to pay... the former can intentionally not pay and the guarantor pays the full amount. If you're going to do this why doesn't the guarantor get a 8% loan, sub-loan it to their kid/friend and if they do default on their repayments to you then at least the interest is much lower. 


The only saving grace is that letting agents are bad at ensuing the deeds are executed properly and so you have a technicality you can argue. Ideally you'd have it drafted at a maximum 2 years or such but if the landlord would agree to a cap on its duration is another matter. 

propertyrental

ThisIsWeird said:

This guarantor malarkey seems deeply flawed.
Is it really the case, for example, that a tenant being 'guarantored' could simply choose to stop paying their rent, in the knowledge that their guarantor would need to pick up the bill? Indefinitely?! 
What's to prevent this from happening, say by a feckless child?! If the tenant can clearly afford to pay the rent, so is simply taking advantage to line their own pockets, can the guarantor escape their liability in some way?

LLs ask for/require guarantors for a tenant where the tenant fails credit checks or is otherwise unable to satisfy the LL that they are reliable/credit worthy. In that scenario, either the LL declines to give the applicant a tenancy, or requires a guarantor so to protect themselves.

If the guarantor were able to escape their liability in some way, the guarantee agreement/deed would be pointless and the T would not have been granted the tenancy but remained homeless instead.

But yes - being a guarantor is a serious commitment and should only be undertaken if they trust the T and know them not to be feckless!

eddddy

ThisIsWeird said:

This guarantor malarkey seems deeply flawed.
Is it really the case, for example, that a tenant being 'guarantored' could simply choose to stop paying their rent, in the knowledge that their guarantor would need to pick up the bill? Indefinitely?! 

That's exactly what being a guarantor means.

If you don't trust the tenant 100%, don't be their guarantor. 

(And every parent with a child who has lived in private student accommodation will have faced this dilemma. Or even worse, if their child rented a shared house with joint and several liability.)

You could say it's a conceptually similar decision to these...

• If you don't trust somebody 100%, don't give them a credit card on your account
• If you don't trust somebody 100%, don't tell them the combination of your safe
• If you don't trust somebody 100%, don't lend them your car

• (And similarly, if you don't trust somebody 100%, don't be their guarantor)

RHemmings

propertyrental said:

ThisIsWeird said:

This guarantor malarkey seems deeply flawed.
Is it really the case, for example, that a tenant being 'guarantored' could simply choose to stop paying their rent, in the knowledge that their guarantor would need to pick up the bill? Indefinitely?! 
What's to prevent this from happening, say by a feckless child?! If the tenant can clearly afford to pay the rent, so is simply taking advantage to line their own pockets, can the guarantor escape their liability in some way?

LLs ask for/require guarantors for a tenant where the tenant fails credit checks or is otherwise unable to satisfy the LL that they are reliable/credit worthy. In that scenario, either the LL declines to give the applicant a tenancy, or requires a guarantor so to protect themselves.

If the guarantor were able to escape their liability in some way, the guarantee agreement/deed would be pointless and the T would not have been granted the tenancy but remained homeless instead.

But yes - being a guarantor is a serious commitment and should only be undertaken if they trust the T and know them not to be feckless!

I would think that guarantors fulfil a useful function, providing that they are not tied in indefinitely. Which could easily be done by adding suitable clauses to the agreements. However, it seems that such clauses are typically not added. 

To my eyes allowing the guarantor to end the arrangement is not them 'escaping their liability', but having control over the length of time that liability lasts for. This is different. 

If the guarantor gives notice to end the agreement, then the landlord should have the option to end the tenancy as a whole, and the guarantor should be liable should it take a reasonable time (e.g. the standard six months) to get the tenant out. Like other aspects of contract law, the landlord should have to minimise their losses. The current situation doesn't look anything like the landlord having to minimise their losses to me. 

Ending a tenancy would still have to be possible if S21 disappears, otherwise the situation may get even more sticky for guarantors. 

Grumpy_chap

ThisIsWeird said:

This guarantor malarkey seems deeply flawed.
Is it really the case, for example, that a tenant being 'guarantored' could simply choose to stop paying their rent, in the knowledge that their guarantor would need to pick up the bill? Indefinitely?! 

Yes.

YoungBlueEyes said:

I can't find it now but there's been a thread on here fairly recently that was basically that.

I linked that upthread:

Grumpy_chap said:

The OP may find this thread worth a read:
https://forums.moneysavingexpert.com/discussion/comment/80524887

ThisIsWeird

doodling said:

Hi,
There is nothing stopping the guarantor suing the tenant for their losses although whether that is worthwhile is debatable if they don't have any money.

I wouldn't agree to be a guarantor unless either the liability was capped or the landlord agreed that they would take all reasonable steps to end the tenancy when instructed by the guarantor.

And that is what would remove the 'flaw'. 

That seems to be common sense, and should be an inherent part of any agreement; if the tenant defaults for X months, they should be turfed out, and the LL not simply sit back and milk the guarantor.

km1500

the first thing to say is that if you are a guarantor than you are a guarantor - that is exactly what it means

however there is nothing to stop you saying I will be only a guarantor up to a maximum of £xx or only for a maximum of xx months or until the fixed term tenacy expires in 12 months time or whatever

ThisIsWeird

DullGreyGuy said:

ThisIsWeird said:

This guarantor malarkey seems deeply flawed.
Is it really the case, for example, that a tenant being 'guarantored' could simply choose to stop paying their rent, in the knowledge that their guarantor would need to pick up the bill? Indefinitely?! 
What's to prevent this from happening, say by a feckless child?! If the tenant can clearly afford to pay the rent, so is simply taking advantage to line their own pockets, can the guarantor escape their liability in some way?

If they have a feckless child, part may say what happened to the parenting that made them grow up like that and secondly we are talking adults here not babies and if your parent has failed and raised a feckless kid then refuse to be a guarantor 

Its the same as being joint on any form of finance, you are signing up for the full amount and if you dont want to pay it then dont sign up to it. The only way to escape it would be to default on the payments and wait for the landlord to evict your kid. 

What's more silly is guarantor loans where a bad credit person gets a 40% APR loan which a good credit person guarantees to pay... the former can intentionally not pay and the guarantor pays the full amount. If you're going to do this why doesn't the guarantor get a 8% loan, sub-loan it to their kid/friend and if they do default on their repayments to you then at least the interest is much lower. 


The only saving grace is that letting agents are bad at ensuing the deeds are executed properly and so you have a technicality you can argue. Ideally you'd have it drafted at a maximum 2 years or such but if the landlord would agree to a cap on its duration is another matter. 

I really meant a child that became 'feckless'.

Many folk land on hard times, or go through traumas - it's part of life. This forum has quite a few cases of relationships breaking down, and one party then finding they've been placed in a difficult financial position due to the (often deliberate) actions of their ex. They trusted them at the time, but things can and do change.

That's what I'm referring to. Very few folk can guarantee the life-long integrity of anyone else, family or no. So I think it's unfair - bizarre - that there should be a situation such as this, where the innocent party could literally be held to ransom - indefinitely.

Such guarantor agreements should, I think, have a 'break' clause written in, such as the process of eviction being started after, say, 6, 9, 12 months of tenant non-payment. Or, the guarantor should have the ability to legally challenge the commitment when it's clear the tenant - and/or LL - are taking the piddle. It should be written in to these contracts.

It is surely clearly unethical that a person doing 'the right thing', is then deliberately taken advantage of, with no escape?

eddddy

doodling said:

I wouldn't agree to be a guarantor unless either the liability was capped or the landlord agreed that they would take all reasonable steps to end the tenancy when instructed by the guarantor.

ThisIsWeird said:

And that is what would remove the 'flaw'. 

There's nothing to stop a landlord capping the guarantor's liability etc.

Maybe if the the landlord was finding it difficult to let a property, they might offer a deal like that as encouragement.

But if the landlord is able to let a property without offering that kind of deal, why would they bother?


(Or I guess you could lobby parliament to try to get them to pass legislation to cap a guarantor's liability, if you want...)