Ending a Guarantee on a Shorthold Tenancy
Discussion
Can anyone help on this.
In 2009 I agreed to act as guarantor on a shorthold tenancy for my wife's sister in law. She was a friend and had children but not sufficient employment history for referencing.
The guarantee has never been used but I know she still lives in the property. We have lost touch with her over the years and asked her to remove me from the guarantee. She did not respond so I contacted the landlord.
I hope it will all be done amicably. However, looking at the lease while it's a continuing guarantee. It says any extension should be notified to the guarantor. Since she is still there and we know in the past she said the rent was increased every year so I assume the lease has been renewed over 10 time. Since I have never been notified of any extensions or the rent increases can I assume my guarantee is now unenforceable?
In 2009 I agreed to act as guarantor on a shorthold tenancy for my wife's sister in law. She was a friend and had children but not sufficient employment history for referencing.
The guarantee has never been used but I know she still lives in the property. We have lost touch with her over the years and asked her to remove me from the guarantee. She did not respond so I contacted the landlord.
I hope it will all be done amicably. However, looking at the lease while it's a continuing guarantee. It says any extension should be notified to the guarantor. Since she is still there and we know in the past she said the rent was increased every year so I assume the lease has been renewed over 10 time. Since I have never been notified of any extensions or the rent increases can I assume my guarantee is now unenforceable?
Depends on the contract. Chances are that the AST was for a fixed period becoming contractual periodic. That would allow for annual rent reviews, and not require a new agreement each time. They should have kept you informed of rent increases, but I don't think that failure to do so means your're off the hook - since the contract specified the increases (probably RPI, min 2/max5% per year).
It may be that after this period of time the LL/LA are happy that she's good for the cash - but releasing you as guarantor does up their risk, so they may well not want to. Check the agreement, talk to the LL/LA/SIL.
It may be that after this period of time the LL/LA are happy that she's good for the cash - but releasing you as guarantor does up their risk, so they may well not want to. Check the agreement, talk to the LL/LA/SIL.
If I was being really bullish, I'd disagree with blindspot and say that the guarantee is ineffective.
The legal principle is that the guarantor's liability will be discharged if changes are made to the AST after the giving of the guarantee, unless (1) the guarantor consented to the change; or (2) the change was immaterial or would not adversely affect the guarantor. Neither of those exceptions seem to apply.
Consider an extreme example where you sign up to guarantee a lease for £100pm for 1 year. Guarantor knows how his liability is capped. If the landlord said after a couple of weeks the rent is now £100,000pm and tenant is locked in for 100 years, it would not be justiciable for the Guarantor to be bound by the new agreement unless he has consented to it. Notification would not be enough.
It is possible for the guarantee to exclude this rule - check the wording of the guarantee carefully.
All based on your short description of the arrangements of course, and having not seen the actual guarantee...
The legal principle is that the guarantor's liability will be discharged if changes are made to the AST after the giving of the guarantee, unless (1) the guarantor consented to the change; or (2) the change was immaterial or would not adversely affect the guarantor. Neither of those exceptions seem to apply.
Consider an extreme example where you sign up to guarantee a lease for £100pm for 1 year. Guarantor knows how his liability is capped. If the landlord said after a couple of weeks the rent is now £100,000pm and tenant is locked in for 100 years, it would not be justiciable for the Guarantor to be bound by the new agreement unless he has consented to it. Notification would not be enough.
It is possible for the guarantee to exclude this rule - check the wording of the guarantee carefully.
All based on your short description of the arrangements of course, and having not seen the actual guarantee...
K4sper said:
If I was being really bullish, I'd disagree with blindspot and say that the guarantee is ineffective.
The legal principle is that the guarantor's liability will be discharged if changes are made to the AST after the giving of the guarantee, unless (1) the guarantor consented to the change; or (2) the change was immaterial or would not adversely affect the guarantor. Neither of those exceptions seem to apply.
Consider an extreme example where you sign up to guarantee a lease for £100pm for 1 year. Guarantor knows how his liability is capped. If the landlord said after a couple of weeks the rent is now £100,000pm and tenant is locked in for 100 years, it would not be justiciable for the Guarantor to be bound by the new agreement unless he has consented to it. Notification would not be enough.
It is possible for the guarantee to exclude this rule - check the wording of the guarantee carefully.
All based on your short description of the arrangements of course, and having not seen the actual guarantee...
^^agree. The OP/Guarantor needs to refer to the wording of the guarantee, since it is usual that the wording of the guarantee only covers the period of the original tenancy agreement (hereafter AST). Therefore since the original tenancy agreement has ended, the same may have rolled over into either a monthly periodic tenancy (hereafter PT), or a new AST agreement. Both the new AST and a PT agreement are not covered by the guarantee.The legal principle is that the guarantor's liability will be discharged if changes are made to the AST after the giving of the guarantee, unless (1) the guarantor consented to the change; or (2) the change was immaterial or would not adversely affect the guarantor. Neither of those exceptions seem to apply.
Consider an extreme example where you sign up to guarantee a lease for £100pm for 1 year. Guarantor knows how his liability is capped. If the landlord said after a couple of weeks the rent is now £100,000pm and tenant is locked in for 100 years, it would not be justiciable for the Guarantor to be bound by the new agreement unless he has consented to it. Notification would not be enough.
It is possible for the guarantee to exclude this rule - check the wording of the guarantee carefully.
All based on your short description of the arrangements of course, and having not seen the actual guarantee...
The OP should write to either the landlord, and or any agent involved removing the OP's as a guarantor.
You need to read the paperwork you signed.
The modern guarantor forms I have seen in the last 5 years don’t mention having to notify the guarantor of anything but they certainly make it clear the guarantor is liable while ever the tenant is residing in the property – including rent increases.
The modern guarantor forms I have seen in the last 5 years don’t mention having to notify the guarantor of anything but they certainly make it clear the guarantor is liable while ever the tenant is residing in the property – including rent increases.
Wings said:
^^agree. The OP/Guarantor needs to refer to the wording of the guarantee, since it is usual that the wording of the guarantee only covers the period of the original tenancy agreement (hereafter AST). Therefore since the original tenancy agreement has ended, the same may have rolled over into either a monthly periodic tenancy (hereafter PT), or a new AST agreement. Both the new AST and a PT agreement are not covered by the guarantee.
The OP should write to either the landlord, and or any agent involved removing the OP's as a guarantor.
Every AST with guarantor I have seen is for the entire duration of the tenancy - for obvious reasons. Might be that the LL/LA screwed up, it’s by no means uncommon. But if they were paying attention I’ll bet £1 that the guarantor is on the hook still. Whether the fixed period became contractual or statutory periodic is immaterial. Assuming, of course, that it’s a properly written agreement and not some badly ctrl-V ctrl-C nonsense from someone who heard about contracts from their mate Dave who also says that dogs can’t look up.The OP should write to either the landlord, and or any agent involved removing the OP's as a guarantor.
Only one way to find out though, check the agreement and talk to LL or LA.
Not necessarily, if it's not in the contract. From the landlord's point of view, they don't want the guarantor getting wind that the tenant has just lost his job or is damaging the flat and backing out. Being a guarantor basically puts you in a very passive position - the tenant can wind up causing you considerable costs. But that's the point of it - you're effectively insuring the landlord against whatever the tenant gets up to.
You definitely need to read your contract. (You do have a copy don't you)
https://england.shelter.org.uk/professional_resour...
I would argue that 10 years in, there's no need for a guarantor.
https://england.shelter.org.uk/professional_resour...
I would argue that 10 years in, there's no need for a guarantor.
vikingaero said:
You definitely need to read your contract. (You do have a copy don't you)
https://england.shelter.org.uk/professional_resour...
I would argue that 10 years in, there's no need for a guarantor.
Why would you argue that?https://england.shelter.org.uk/professional_resour...
I would argue that 10 years in, there's no need for a guarantor.
I would argue that (even though the tenant may well have proved to be brilliant in the last 10 years) there is still exactly the same need because their financial position could change at any time in the future.
Thanks for the replies. I have checked the agreement again. There are no provisions which allow for a rent increase. The termination section only allows it to become a monthly tenancy at the end of the period. The guarantee section does say the guarantee continues on to any new tenancy period but that notice must be given to the guarantor.
andyxxx said:
You need to read the paperwork you signed.
The modern guarantor forms I have seen in the last 5 years don’t mention having to notify the guarantor of anything but they certainly make it clear the guarantor is liable while ever the tenant is residing in the property – including rent increases.
I don't see on what basis that could be enforced.The modern guarantor forms I have seen in the last 5 years don’t mention having to notify the guarantor of anything but they certainly make it clear the guarantor is liable while ever the tenant is residing in the property – including rent increases.
I am not aware of any piece of legislation or case law that would support one party being able to unilaterally change the level of liability another is exposed to without notifying them.
I also think it would be fairly clear that the intention would never have been for the OP to act as a Guarantor for a decade for a person he no longer has contact with.
I was (am) guarantor on a rented flat and asked the letting agency about removing myself as guarantor, for reasons that I don’t really need to go into. They responded to say that I could but it would then be down to the tenant to find an alternative, else there was a chance that they could be evicted.
In fairness, there was never actually any chance of me being liable for anything, as the tenant’s family would have ensured that I wasn’t and there would have been several people who could have stood as a replacement guarantor.
I kind of forgot all about it after my initial enquiry and as it transpires, the person passed away recently - I guess I ought to contact the agency to get confirmation that everything is settled to their satisfaction.
In fairness, there was never actually any chance of me being liable for anything, as the tenant’s family would have ensured that I wasn’t and there would have been several people who could have stood as a replacement guarantor.
I kind of forgot all about it after my initial enquiry and as it transpires, the person passed away recently - I guess I ought to contact the agency to get confirmation that everything is settled to their satisfaction.
I can't speak for specifics on Landlords etc but I was involved in a Small claims court and the Judge made a real issue and point on "reasonable notice", that is what you knew, what you know and who was obliged to give you information.
Looking in from the outside, You knew a guarantee exists, you know the lady still lives there, you know that explicitly the guarantee has never been withdrawn.
If it was me, I'd bypass the tenant and write to the landlord saying that after 10 yrs, it is not reasonable that you need the guarantee and you consider that you are not bound by it after all this time
If nothing else, it will save you reading the contract because they'll either let you off or come out fighting.
Also, it would be good to do this in month 11 so as it limit the possible liability because if you don't guarantee they have to either accept it or give here notice, it seems illogical that you are indefinitely tied.
It's just my opinion
Looking in from the outside, You knew a guarantee exists, you know the lady still lives there, you know that explicitly the guarantee has never been withdrawn.
If it was me, I'd bypass the tenant and write to the landlord saying that after 10 yrs, it is not reasonable that you need the guarantee and you consider that you are not bound by it after all this time
If nothing else, it will save you reading the contract because they'll either let you off or come out fighting.
Also, it would be good to do this in month 11 so as it limit the possible liability because if you don't guarantee they have to either accept it or give here notice, it seems illogical that you are indefinitely tied.
It's just my opinion
AngryPartsBloke said:
I don't see on what basis that could be enforced.
I am not aware of any piece of legislation or case law that would support one party being able to unilaterally change the level of liability another is exposed to without notifying them.
If the original contract stipulated that the rent would increase then I'd think it would be enforcable.I am not aware of any piece of legislation or case law that would support one party being able to unilaterally change the level of liability another is exposed to without notifying them.
AngryPartsBloke said:
I also think it would be fairly clear that the intention would never have been for the OP to act as a Guarantor for a decade for a person he no longer has contact with.
10 months or 10 years, it would be in place until the tenant could convince the landlord that their financial position has changed and the risk is no longer there.Gassing Station | Speed, Plod & the Law | Top of Page | What's New | My Stuff