Periodic tennancy and rental guarantees

[jamesuk28]

We have a client who rented a property to a tenant. The parents of the tenant signed a guarantee. After the assured shorthold agreement expired the tennancy was transferred to a periodic tenancy. Should the guarantee have been renewed at this time or is it still valid?

[Piglet]

It depends on the wording of the guarantee. I looked at one recently where the wording of the guarantee was for the "term" and the term was defined as the five years from and including X (it was a commercial one) and (because the tenancy was outside the L&T act) the term wasn't expressed to be five years from.....x including any period of holding over (which is a bit of a bummer as my client has nearly 70k's worth of arrears owing on it and the tenant is about to go under!).

So check the wording and see what it says and then see what the term says.

[jamesuk28]

Thanks Piglet. I have already asked the client to forward a copy of the guarantee so we can take a look. The property in question was managed by a letting agent and I would have hoped they may have tried to protect our clients position when the tenancy transferred to a periodic one.

[Piglet]

Hmmm IME letting agents usually try to manage properties so that they are able to produce a further agreement at six/twelve months which they can then charge for!

Post the wording or pm it to me if you want me to take a look. Just be aware I can't get pm's in the daytime as email is blocked at work.

[Wings]

jamesuk28 said:

Thanks Piglet. I have already asked the client to forward a copy of the guarantee so we can take a look. The property in question was managed by a letting agent and I would have hoped they may have tried to protect our clients position when the tenancy transferred to a periodic one.

It is normal for them to be worded as follows;

1. The Guarantor hereby acknowledges receipt of one penny being consideration for the granting of this guarantee and hereby covenants with and to the landlord that:
(a) If the Tenant shall make any default at any time during the term of the Tenancy Agreement and any extension of that term, whether evidence in writing or not, in payment of the rent or in observing or performing any of the covenants or restrictions contained in the Tenancy Agreement, the Guarantor will pay the rent and observe and perform the covenants.

[skwdenyer]

Wings said:

jamesuk28 said:

Thanks Piglet. I have already asked the client to forward a copy of the guarantee so we can take a look. The property in question was managed by a letting agent and I would have hoped they may have tried to protect our clients position when the tenancy transferred to a periodic one.

It is normal for them to be worded as follows;

1. The Guarantor hereby acknowledges receipt of one penny being consideration for the granting of this guarantee and hereby covenants with and to the landlord that:
(a) If the Tenant shall make any default at any time during the term of the Tenancy Agreement and any extension of that term, whether evidence in writing or not, in payment of the rent or in observing or performing any of the covenants or restrictions contained in the Tenancy Agreement, the Guarantor will pay the rent and observe and perform the covenants.

Of course, the guarantee is only as strong as the guarantor...