Being a Guarantor

It happens often when renting property that a landlord or renting agent will ask for a guarantor, so we thought we would give a little insight in what it means for someone to be one and what a guarantors rights and responsibilities really are.

Rent Guarantor

Often referred to as a rent guarantor or someone to guarantee the rent, being a guarantor usually involves much more than just covering the rent. Letting agents and some landlords have pre-defined guarantor agreements which enables them to cover all the tenant’s liabilities under the tenancy agreement , not just the rent.

This means that as well as being responsible to pay the rent, should the person you are being guarantor for fails to do so, you will also be responsible for any damages they may make at the property which would not be covered by any deposit held. Furthermore, in the event of the landlord having to take up legal proceedings then you will be named on any such action.

Letting agents and Landlords use of a Guarantor is like an insurance policy against the tenant defaulting on their obligations under the tenancy agreement. The requirements for being a guarantor are that they must usually be a homeowner that does not fail a credit score inquiry and is therefore probably in regular employment. A person would not provide much of a guarantee if they were themselves were believed to be unable to make a payment should they be called upon to do so.

A guarantor differs from a surety in that the former cannot be sued until a failure on the part of the principal (normally the tenant), when sued; while the latter may be sued at the same time with the principal.

Can I change my mind about being a Guarantor later?

In a word – NO, not unless the other party (landlord) agrees, as normally the guarantor is responsible for the period of the tenancy or whatever is within the agreement you have signed.

Guarantor Rights.

Once you have signed you cannot change your mind about being the guarantor and will be responsible for the tenancy almost as much as the tenant until the end of that tenancy. So do not sign any agreement until the tenancy as started. If you sign up and your friend fails to start the tenancy for any reason – maybe they fall out with the girlfriend the day before they move in, then the landlord will come straight to you to pay the rent and any re-let fees involved.

Becoming a Guarantor is a big responsibility and can have a lot of serious consequences, so it is important to understand exactly what you are getting yourself into and what the impact of signing the agreement may be. It means that you are prepared to pay off the whole of the debt if the tenant does not.

Can I limit my Guarantee as Tenancy Guarantor?

In theory, yes. You can ask, and specify to the landlord that you’re not happy with the proposed agreement and that you will only be a Guarantor if you can limit your Guarantee to a specified amount of money and/or for a limited amount of time (i.e. the fixed period of the tenancy) .

However, limiting a Guarantee is usually easier said than done. You should remember that the whole reason that the landlord requires a Guarantor is because in his mind the tenant (your friend) is not able to provide sufficient security on his or her own. If you try and limit your Guarantee the landlord or agent may then refuse to give a tenancy in the first place.

If there is a missed rent payment you may then receive collection calls from the landlord or agency who your friend is renting from and if you don’t make the payments you can be sued for the arrears.

If you lose in court, you’ll have a judgment on your credit report. The landlord may even be able to get a court order against your wages to get repayment. Scary stuff.

Guarantor Agreement Form

Before you sign the Guarantor agreement you should make sure that you receive a copy of the tenancy agreement that your friend is taking out so you can see exactly what obligations they have as the tenant because you will be guaranteeing all those obligations.

Then make sure you read the guarantor agreement fully and make sure that you have a clear understanding of what these documents say and what you are guaranteeing. You should know details such as:

  1. how much is the rent,
  2. how long is the rental agreement for,
  3. Are there other tenants on the rental agreement other than the person you seek to guarantee,
  4. is your property being used as security…

Ensure that you are comfortable with the whole set up of both the tenancy and the Guarantee.

If in doubt, don’t sign and get legal advice.