How to cancel a Guarantor
Discussion
My friend has signed as a guarantor for her daughter but now wants to revoke the garantor. The daughter is now 5 months into a 6 month AST, the rent is paid on time every month and there are no arrears.
Would the best action be to write to the landlord giving instruction that after say 4 months (this sounds a fair amount of time) that her guarantor will no longer be valid. The landlord has 2 options either give the daughter notice or let her live there without a garantor.
Below is the guarantor she signed. From what I have read points 7 & 8 seem to contradict each other.
1. The Landlord agrees to let the Property to the Tenant(s). In consideration of this, the Guarantor agrees to act for the Tenant(s) should he/they fail, for any reason, to meet the financial commitments arising from the Tenancy Agreement entered into in respect of the Property.
2. This Guarantor Agreement refers to the current tenancy being undertaken and any extension or renewal of that tenancy. All references to the Landlord herein shall be deemed to include the Landlord's Agent or any person authorised to act on the Landlord's behalf.
3. The Guarantor undertakes to pay to the Landlord from the date of this Agreement from time to time the Rent within 10 days of receipt of a written demand from the Landlord or his Agent addressed to the Guarantor if the Tenant following demand has not paid the amount being demanded when it was due under the Tenancy Agreement.
4. The Guarantor shall pay and make good to the Landlord on demand all reasonable losses and expenses of the Landlord incurred as a result of default by the Tenant in the performance or observance of the Tenant's covenants under the Tenancy Agreement. Any failure of the Landlord in demanding or collecting the Rent when it falls due, and any time to pay which may be given to the Tenant by the Landlord shall not release the Guarantor or in any way affect the liability of the Guarantor under this agreement. Should the Guarantor die during the currency of this agreement, the Guarantor’s estate will be liable as surety and co-principal debtor.
5. Where the Rent, or any portion of it, is paid by housing benefit or other benefit scheme, the Guarantor agrees to pay the Landlord or Agent for the amount of any claims arising from overpayment, which may be made by the local authority in relation to the specified Tenant(s). Such overpayments may occur at any time, either during the tenancy or within six years thereafter.
6. If the tenancy is for a fixed term, then this guarantee applies for the whole of the term and is not revocable during that term.
7. If the tenancy is periodic or has become periodic by agreement or the operation of law, then this guarantee may be terminated by written notice by the Guarantor subject to the Tenant vacating at the earliest legally permissible date required for possession. If the Tenant fails to vacate on this earliest date then the guarantee shall continue until the Tenant vacates.
8. It is agreed that there shall be no right to cancel this Agreement once the tenancy has begun and the Consumer Protection (Distance Selling) Regulations 2000 shall not apply in this case.
Would the best action be to write to the landlord giving instruction that after say 4 months (this sounds a fair amount of time) that her guarantor will no longer be valid. The landlord has 2 options either give the daughter notice or let her live there without a garantor.
Below is the guarantor she signed. From what I have read points 7 & 8 seem to contradict each other.
1. The Landlord agrees to let the Property to the Tenant(s). In consideration of this, the Guarantor agrees to act for the Tenant(s) should he/they fail, for any reason, to meet the financial commitments arising from the Tenancy Agreement entered into in respect of the Property.
2. This Guarantor Agreement refers to the current tenancy being undertaken and any extension or renewal of that tenancy. All references to the Landlord herein shall be deemed to include the Landlord's Agent or any person authorised to act on the Landlord's behalf.
3. The Guarantor undertakes to pay to the Landlord from the date of this Agreement from time to time the Rent within 10 days of receipt of a written demand from the Landlord or his Agent addressed to the Guarantor if the Tenant following demand has not paid the amount being demanded when it was due under the Tenancy Agreement.
4. The Guarantor shall pay and make good to the Landlord on demand all reasonable losses and expenses of the Landlord incurred as a result of default by the Tenant in the performance or observance of the Tenant's covenants under the Tenancy Agreement. Any failure of the Landlord in demanding or collecting the Rent when it falls due, and any time to pay which may be given to the Tenant by the Landlord shall not release the Guarantor or in any way affect the liability of the Guarantor under this agreement. Should the Guarantor die during the currency of this agreement, the Guarantor’s estate will be liable as surety and co-principal debtor.
5. Where the Rent, or any portion of it, is paid by housing benefit or other benefit scheme, the Guarantor agrees to pay the Landlord or Agent for the amount of any claims arising from overpayment, which may be made by the local authority in relation to the specified Tenant(s). Such overpayments may occur at any time, either during the tenancy or within six years thereafter.
6. If the tenancy is for a fixed term, then this guarantee applies for the whole of the term and is not revocable during that term.
7. If the tenancy is periodic or has become periodic by agreement or the operation of law, then this guarantee may be terminated by written notice by the Guarantor subject to the Tenant vacating at the earliest legally permissible date required for possession. If the Tenant fails to vacate on this earliest date then the guarantee shall continue until the Tenant vacates.
8. It is agreed that there shall be no right to cancel this Agreement once the tenancy has begun and the Consumer Protection (Distance Selling) Regulations 2000 shall not apply in this case.
As a landlord myself, the request would possibly set alarm bells ringing...
1. Presumably the tenant was deemed a credit risk in some way, hence the requirement for the guarantor in the first place.
2. What has changed in the last 5 months to change this?
3. Why does the mother want to remove her liability?
If there is no risk to the landlord (i.e. the daughter is paying the rent, and there are no problems), then why would the mother want to be removed anyway as her being guarantor isn't a problem for her? Does the daughter plan to leave in a months time?
1. Presumably the tenant was deemed a credit risk in some way, hence the requirement for the guarantor in the first place.
2. What has changed in the last 5 months to change this?
3. Why does the mother want to remove her liability?
If there is no risk to the landlord (i.e. the daughter is paying the rent, and there are no problems), then why would the mother want to be removed anyway as her being guarantor isn't a problem for her? Does the daughter plan to leave in a months time?
PAULJ5555 said:
Below is the guarantor she signed. From what I have read points 7 & 8 seem to contradict each other.
She signed your friend??? 
In all seriousness 5 months is a very short term in the scheme of things and it is certainly not enough time for the landlord to have built up a level of trust in the Tenant to forgo the Guarantor's guarantee.
I know a Landlord who had previously released a guarantor from their obligations after two years of the Tenant fulfilling their obligations. However within 3 months rent was not being paid and significant damage had occurred at the property.
The elephant in the room is why the daughter needed a Guarantor in the first place if there is a history of leaving a trail of debt or is on a very low income it would be very naive of the Landlord to allow the Guarantor to withdraw from their obligations.
UpTheIron said:
As a landlord myself, the request would possibly set alarm bells ringing...
1. Presumably the tenant was deemed a credit risk in some way, hence the requirement for the guarantor in the first place.
2. What has changed in the last 5 months to change this?
3. Why does the mother want to remove her liability?
If there is no risk to the landlord (i.e. the daughter is paying the rent, and there are no problems), then why would the mother want to be removed anyway as her being guarantor isn't a problem for her? Does the daughter plan to leave in a months time?
The tenant has good credit but the guarantor was needed because the daughter earned less than £25k p.a. and is not in a secure job (who is). The mother earns over £25k and has assets so makes a good back up as in a guarantor.1. Presumably the tenant was deemed a credit risk in some way, hence the requirement for the guarantor in the first place.
2. What has changed in the last 5 months to change this?
3. Why does the mother want to remove her liability?
If there is no risk to the landlord (i.e. the daughter is paying the rent, and there are no problems), then why would the mother want to be removed anyway as her being guarantor isn't a problem for her? Does the daughter plan to leave in a months time?
Im not 100% sure why she wants to end it but I think she wants her daugter back home and away from her layabout good for nothing boy friend that now lives with her.
I am also a landlord for info.
Kapenta said:
See Clause 6
Once the AST has expired, then Clause 7 comes into effect. IANAL but I am sure that one or more shall be along soon.
This is the correct answer. Once the AST has expired, then Clause 7 comes into effect. IANAL but I am sure that one or more shall be along soon.
It's pretty clear from the guarantee* that the continued existence of the tenancy is dependent on there being a guarantee in place. So no guarantee, no roof over head...
PS: Cl 8 is talking about cancellation - setting aside so that both sides treat the whole thing as if it had never been entered into - so there was never a guarantee in the first place. It seems to be addressing a particular right that would otherwise exist under the regs cited. Termination in cl 7 is about bringing the relationship to an end - so there was a guarantee for a period of time, and now there isn't.
*Guarantee = the promise to pay someone else's debt. Guarantor = the person giving the guarantee. Person whose debt is being guaranteed = debtor. Person who is owed money by debtor and who has the benefit of the guarantee = creditor.
Edited by anonymous-user on Friday 11th July 16:19
TheHound said:
<snip>
The elephant in the room is why the daughter needed a Guarantor in the first place if there is a history of leaving a trail of debt or is on a very low income it would be very naive of the Landlord to allow the Guarantor to withdraw from their obligations.
Alternatively the landlord / agent is tosser and insists on a guarantor or huge up front rent payment in addition to their ridiculous Key Money disguised as fees The elephant in the room is why the daughter needed a Guarantor in the first place if there is a history of leaving a trail of debt or is on a very low income it would be very naive of the Landlord to allow the Guarantor to withdraw from their obligations.
mph1977 said:
TheHound said:
<snip>
The elephant in the room is why the daughter needed a Guarantor in the first place if there is a history of leaving a trail of debt or is on a very low income it would be very naive of the Landlord to allow the Guarantor to withdraw from their obligations.
Alternatively the landlord / agent is tosser and insists on a guarantor or huge up front rent payment in addition to their ridiculous Key Money disguised as fees The elephant in the room is why the daughter needed a Guarantor in the first place if there is a history of leaving a trail of debt or is on a very low income it would be very naive of the Landlord to allow the Guarantor to withdraw from their obligations.
What the heck is Key Money?
A good Landlord/Agent should always undertake some level of risk analysis on every tenant and if the situation demands, it is very sensible to insist a guarantor is provided to protect their asset and investment.
TheHound said:
mph1977 said:
TheHound said:
<snip>
The elephant in the room is why the daughter needed a Guarantor in the first place if there is a history of leaving a trail of debt or is on a very low income it would be very naive of the Landlord to allow the Guarantor to withdraw from their obligations.
Alternatively the landlord / agent is tosser and insists on a guarantor or huge up front rent payment in addition to their ridiculous Key Money disguised as fees The elephant in the room is why the daughter needed a Guarantor in the first place if there is a history of leaving a trail of debt or is on a very low income it would be very naive of the Landlord to allow the Guarantor to withdraw from their obligations.
What the heck is Key Money?
A good Landlord/Agent should always undertake some level of risk analysis on every tenant and if the situation demands, it is very sensible to insist a guarantor is provided to protect their asset and investment.
pre TDS the deposit had become key money for many landlords / agents as at least half the deposit would be swallowed up in spurious charges - this was why the TDS was brought in .
subsequently we've seen ridiciulously inflated credit checking, inventory and documentation production fees introduced by some landlords / agents - these are often 90+% profit 300+ pounds for a less than 30 gbp credit check, 100 gbp for an inventory which took the office junior 10 minutes to type up , 100 gbp for two copies of a boilerplate tenancy to be put onto headed paper ...
mph1977 said:
Key money is a 'gift' to the landlord or person arranging the tenancy. British law sees it as a bribe if it is specifically requested / required as such and therefore illegal.
pre TDS the deposit had become key money for many landlords / agents as at least half the deposit would be swallowed up in spurious charges - this was why the TDS was brought in .
subsequently we've seen ridiculously inflated credit checking, inventory and documentation production fees introduced by some landlords / agents - these are often 90+% profit 300+ pounds for a less than 30 gbp credit check, 100 gbp for an inventory which took the office junior 10 minutes to type up , 100 gbp for two copies of a boilerplate tenancy to be put onto headed paper ...
Thanks for clarifying, much better articulated this time. pre TDS the deposit had become key money for many landlords / agents as at least half the deposit would be swallowed up in spurious charges - this was why the TDS was brought in .
subsequently we've seen ridiculously inflated credit checking, inventory and documentation production fees introduced by some landlords / agents - these are often 90+% profit 300+ pounds for a less than 30 gbp credit check, 100 gbp for an inventory which took the office junior 10 minutes to type up , 100 gbp for two copies of a boilerplate tenancy to be put onto headed paper ...
Unfortunately, like anything some rogues in the industry give the rest, who are mostly honest and decent a bad name.
I have never come across the key money bribe before, although fully aware of rogues (some national chains included) making spurious deductions from deposits and I agree this sort of behaviour is totally unacceptable.
I also agree that the TDS is a necessary evil to offer some protection against the crooks out there.
In respect to the mark up on references, the example you have provided is definitely taking the piss. However you do need to factor in this probably includes VAT and agents needs to cover overheads including staffing costs as well as making some profit so so a mark up on the cost price is justified.
Some agents really do exploit Tenants and that just isn't right. One example I came across recently was the largest Estate Agents in the UK, who advertised the Tenants fee at £50 plus others MAY apply. However, when digging deeper, it was apparent that these additional fee would apply and would actually cost in excess of £500 in fees to the agent before deposit and first months rent.
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