/ Adivce on being a guarantor for a rental property

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phja - on 09 Jun 2017
Evening all, I'm hoping to pick the UKC collective brain for some wisdom and advice.

I've been asked to be a guarantor for a family member for a rental property. It is a 6 bed house on a joint tenancy. I've spoken to the letting agency and there position is that, since it is a joint tenancy that all tenants are jointly liable for the rent, and by extension all guarantors are liable should the tenants default.

This makes me uncomfortable, but I'm keen to help my family member out, so am looking for any wiggle room in the T&Cs of the guarantor form.

The form states the household monthly rent (£2600) and the tenant's share of the rent (£433). In the T&Cs of the guarantor section of the form it states "by completing this form, you have agreed to act as guarantor for the tenant named within this form. If you default in respect of any covenants you have given as guarantor including the payment of rent on behalf of the tenant when the tenant has failed to pay their rent, we may record this on a central database...".

Now, should the whole house and all the other guarantors default from day 1, they would come after me for the full yearly rental figure (£31,200!!), however I'm hoping the wording quoted above will mean I'm only liable for my family member's part of the rent. Would a good lawyer be able to swing this for me?

We haven't yet seen the tenancy agreement (they refuse to provide us with it until I complete this guarantor form), so as a guarantor this"agreement" is all I'll get to see...this sounds dodgy to me and I wonder how enforceable it would be given I've not seen the full T&Cs of the tenancy agreement and won't get to see what "covenants" I'm signing up to until I've agreed to be guarantor?

Any advice would be great

Thanks!
johnwright - on 09 Jun 2017
In reply to phja:

I would put my running shoes on and run in the oposite direction like f*ck.
Climbing Pieman on 09 Jun 2017
In reply to phja:
> Any advice would be great.
Disclaimer - long since retired from giving advice, so seek proper advice. Please consult a solicitor and do not sign anything before that.

First rule of thumb is never act as guarantor unless you know and accept fully what the contract says, and you can actually afford to pay if they come after you. A guarantor is exactly that, and normally you can not limit your liability to less than that of the person you are guarantor for is liable in law. What if say you fall out with your family member or vice versa, if they fall out with other tenants, etc, then do you accept that you (most likely) are liable for potentially the whole rent and any and all other tenancy conditions? Bear in mind that your liability will not doubt be open ended in time also, and you, as a guarantor, will not be in a position to end the tenancy yourself.

In this case from what you have said, walk away. A broad brush generalisation, in Scotland/England, it was normally joint tenants were each jointly and individually responsible for paying the rent. Can't imagine things have changed much or that the agreement restricts liability to only the tenant's individual share. You haven't seen the agreement so you have to assume the worst case which is probably they can ask your family member to pay part or all the rent if any one, or more, or all of the tenants default, and if he/she can't or won't pay, they can then come after you.

Plenty of stuff on the web, one example is https://www.citizensadvice.org.uk/housing/renting-a-home/student-housing/students-in-private-rented-... . Also, check out Shelter's website for the country you are in. However, do take legal advice as the cost will be small compared with a worst case situation developing.

johncoxmysteriously - on 10 Jun 2017
In reply to phja:

>however I'm hoping the wording quoted above will mean I'm only liable for my family member's part of the rent.

Going off what you've said, it will not mean that.

>Would a good lawyer be able to swing this for me?

You mean negotiate it? Doubtful.

I'd at least look at the tenancy agreement you're guaranteeing first. If they won't send it to you, they're unprofessional. They may or may not also be crooks.

Surely they've sent your family member a copy, though?

jcm
summo on 10 Jun 2017
In reply to phja:

Don't. Unless you are in a position where a black mark against you won't matter. Ie. Retired, house paid off, you won't need to rent etc...
neilh - on 10 Jun 2017
In reply to phja:

I am afraid this is normal practise.

My daughter has been renting for the last 3 years student accommodation in London.

It's typical and standard for this type of agreement.
neilh - on 10 Jun 2017
In reply to summo:
It's a simple choice in the student rental market. Either sign the agreement or you do not rent.
phja - on 10 Jun 2017
In reply to phja:
Thanks for all the replies This has confirmed our gut feeling on this.

Yeah it is for 6 of them, all university placement students at the same company in London. The tenants have only met briefly for a viewing of the house.

Nope no tenancy agreement has been given to anyone including the tenants. Tenants have already paid holding deposit (£600), inventory fee (£220) and admin fees (1050) all without have seen the contract. This was all done before we were aware. Only got asked to be a guarantor on Thursday afternoon.

The problem is this they are meant to be moving in on Tues 20th June!! So there is a lot of time pressure involved. Job placement actually starts Monday 19th.

We have requested to be a sole Guarantor only for my family member's rent which the landlord is considering. Any advice on how this would work legally? Would it be possible to have a written agreement that specifically states our maximum liability (our family member's rent) and which cannot be breached under any circumstances?

Thanks again for everyone's help! I really appreciate it.
Post edited at 07:55
summo on 10 Jun 2017
In reply to neilh:

> It's a simple choice in the student rental market. Either sign the agreement or you do not rent.

I meant in terms of being a guarantor for others. It depends on what you are risking personally in the future should your friend or the landlord become problematic.
neilh - on 10 Jun 2017
In reply to phja:
If it's London and a good letting agent they will not vary the guarantee.

Like it or lump it.


By the way haggle on price
Post edited at 09:19
Dax H - on 10 Jun 2017
In reply to phja:

They want you to sign a contract that makes you legally responsible for unspecified terms on a different contract they they will not show you.
Sounds fine to me, sign it then contact me.
I am a Nigerian Prince with a fantastic investment opportunity.
phja - on 10 Jun 2017
In reply to Dax H:

Please take my bank details straight away...what an opportunity!
Big Ger - on 12 Jun 2017
In reply to phja:

> The tenants have only met briefly for a viewing of the house.

Oh, no worries then, you know, it's not like they could all have a massive falling out, that one or more of them could be personality disordered or psychopaths, it's not like they could turn out to throw massive facebook publicised raves there or anything.

As a landlord I have refused to offer my house to group sharing, and even with respectable married couples, excrement and whirling object can collide. (One couple I had in had been married for 25 years, then she met our neighbours, and ran off with the wife of the couple....)
neilh - on 12 Jun 2017
In reply to Dax H:

As I said earlier all depends on the quality of the letting agent.if they are good then as standard practise they will have done credit reference checks on both the student and the bank guarantor. the letting agrent should tell you this. Some will even want you to provide financial statements to confirm you are good for your share.So in turn you can check this has all been done.

My daughters first London studenthouse rental ( Hendon) was with 5 girls , none of whom knew each other. The letting agent got all this type of info as standard.

tom_in_edinburgh - on 12 Jun 2017
In reply to neilh:

> It's a simple choice in the student rental market. Either sign the agreement or you do not rent.

That's the way it looked to me with my daughter: the guarantor agreements terms are completely one-sided and unfair but there are a ton of people willing to sign them so the agencies just refuse to negotiate. They should at least give you a copy of the contract though.

If there is a choice of relatives to sign, choose someone with no assets. If push comes to shove there is no point in suing someone with no money.
Dax H - on 13 Jun 2017
In reply to tom_in_edinburgh:

> the guarantor agreements terms are completely one-sided and unfair but there are a ton of people willing to sign them so the agencies just refuse to negotiate. They should at least give you a copy of the contract though.

I don't think trying to get money owed is unfair, the nub of the op's post to me is the refusal to let them see the main contract until he has signed to say he will be fiscally liable for it.
Might as well just give them a blank check.


Trangia on 13 Jun 2017
In reply to phja:
I know exactly how you feel as I had to act as guarantor for a grandson a few years ago. You are very exposed. The trouble is and as others have pointed out the demand for student accommodation is so high that the Landlords and their agents can set the terms they like because your family member is under huge pressure to sign up with lots of other students waiting in the wings for the property (or so the agent will say), and you only have a few days, sometimes just hours to make up your minds and sign up. If you don't, you lose it.

It's a horrible situation to be in.

In my case the tenancy didn't go smoothly. At the outset none of them knew each other. They fell out badly with one of the house sharers who wasn't pulling her weight practically and financially, Another had a boyfriend move into her room who was using the kitchen and other people's food, not to mention hot water, heating and lighting, but not contributing towards the costs. Fortunately over the period they muddled through, but there were some worrying moments for me as Guarantor.

I wouldn't do it again where it involves relying on the continued goodwill of other joint tenants. Unfortunately though, in the way of things. Shared houses are all most students can afford.

One tip, if you go for it, insist that your family member draws up a written and photographic inventory of everything in the house and it's condition at the outset and get it agreed in writing with the Landlord/agent. If it's prepared by the agent get your family member to check it thoroughly and insist on any signed amendments going into it. In reality because of the time pressure this may prove difficult if not impossible (agents play on this). But fail to do this and your family member may be faced with a huge bill for pre-existing damage at the end of the Agreement. Be warned!
Post edited at 08:26
Neil Williams - on 13 Jun 2017
In reply to neilh:

> It's a simple choice in the student rental market. Either sign the agreement or you do not rent.

Or you look for a smaller property with maybe 3 sharers, where the worst case would be less unaffordable.
john arran - on 13 Jun 2017
In reply to Trangia:

> The trouble is and as others have pointed out the demand for student accommodation is so high that the Landlords and their agents can set the terms they like because your family member is under huge pressure to sign

This is just the kind of thing we need a responsible government to regulate, so as not to end up with market-forces exploitation of the powerless.
neilh - on 13 Jun 2017
In reply to Neil Williams:

Agreed. In subsequent years my daughter reduced it to 3 sharing a flat from 5 in a house.
Trangia on 13 Jun 2017
In reply to john arran:

> This is just the kind of thing we need a responsible government to regulate, so as not to end up with market-forces exploitation of the powerless.

Good point, but in reality just how would you regulate it? I suppose one solution is to increase the stock of council owned property and take it out of the private sector, but that would take decades to achieve, much longer than the life span of any government.

Tax private Landlords too highly and you remove the incentive, resulting in the supply going own thereby increasing demand.

It's a problem everyone is aware of, but no-one has got the answer!
john arran - on 13 Jun 2017
In reply to Trangia:

It isn't a question of money, but of behaviour. One option in this case could be to regulate rent guarantees to limit the requirement for individual liability to a proportion of the total, according to how many renters or other guarantors there are. It can't be beyond the wit of man, surely. How they can justify requiring five separate guarantors, each guaranteeing the full value of the house rent, is beyond me.
Trangia on 13 Jun 2017
In reply to john arran:

Good idea, but I'm not a lawyer. Maybe one of our legal beavers can come in on this?
Big Ger - on 13 Jun 2017
johncook - on 13 Jun 2017
In reply to phja:

Don't! That simple. Even close family can screw you over. (Voice of experience!)
1
Neil Williams - on 13 Jun 2017
In reply to Trangia:
> Good point, but in reality just how would you regulate it? I suppose one solution is to increase the stock of council owned property and take it out of the private sector, but that would take decades to achieve, much longer than the life span of any government.

More halls of residence?

Tax breaks for renting HMOs to students/sharers as individual contracts with no joint/several liability?
Post edited at 10:26
Lord_ash2000 - on 13 Jun 2017
In reply to phja:

I'm a Landlord and I'd stay well away from that sort of arrangement if I were you.

Even if they were reliable in terms of their income and willingness to pay the rent, what can easily happen is other members of the group of 6 might not be, or some of them move out or leave after a big falling out etc. Meaning the remaining tenants have to make up the difference in rent. If they can't afford it then you are landed with the bill.

Lots of risk for no gain as far as I see, especially with 6.
dave657 on 13 Jun 2017
In reply to phja:

Presumably the other 5 tenants will also have to provide guarantors. So what are the chances you'd be left with a bill, if one tenant does a runner? They'd hopefully go after that persons guarantor first. If not, 6 guarantors and you'll only pay part of the bill? I'm just guessing here though!

Has anyone ever had to pay money as a guarantor? I've never heard of it before.

As said, I'd be more worried about not getting to see the contract first.
1
fred99 - on 13 Jun 2017
In reply to dave657:

> Presumably the other 5 tenants will also have to provide guarantors. So what are the chances you'd be left with a bill, if one tenant does a runner?

If one tenant does a runner, how can you be so certain that their guarantor won't.

They'd hopefully go after that persons guarantor first.

They may well just pick a name, or go for the easiest, or the guarantor of the idiot may demand the bill is split - how many times have you been at a meal where one person has eaten loads of the most expensive food and drink, then tried to split the bill evenly.

If not, 6 guarantors and you'll only pay part of the bill? I'm just guessing here though!

What if it turns out the other guarantors don't have the wherewithal to pay.

> Has anyone ever had to pay money as a guarantor? I've never heard of it before.

> As said, I'd be more worried about not getting to see the contract first.

That's the most worrying feature - I think the fact that these potential lessees have spent so much money up front without seeing anything in writing means the lessees have no financial nous, and the letting agent could be "on the con".
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timjones - on 13 Jun 2017
In reply to john arran:

> It isn't a question of money, but of behaviour. One option in this case could be to regulate rent guarantees to limit the requirement for individual liability to a proportion of the total, according to how many renters or other guarantors there are. It can't be beyond the wit of man, surely. How they can justify requiring five separate guarantors, each guaranteeing the full value of the house rent, is beyond me.

Maybe it is the legal profession that draws up such agreements that needs to be better regulated?
spenser - on 13 Jun 2017
In reply to phja:

My aunt acted as my guarantor both in second and third year while I was at university, she simply paid my rent for the year in advance and then I paid her once my student loans came in each term. Not an option for a lot of people, however it gets you out of being liable for a contract they won't let you read.
In my view the industry needs significant reform, at present estate agents appear to only be in the industry as they couldn't get a job elsewhere, the one I used in Derby lost my keys on the day I was supposed to collect them and had to get the lock replaced!

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