More and more landlords are now requiring tenants to provide guarantors, in addition to carrying out the usual referencing checks. This gives a landlord some added protection against the risk of the tenant failing to pay rent under the tenancy agreement. However, it is important that landlords ensure that the guarantor signs an express agreement, so that the landlord can legally enforce the obligations against the guarantor, should the tenant fail to fulfil theirs. So how do you put a guarantor agreement in place?
Our team were recently presented with a lease which contained no provision for any guarantor obligations within it, but with a signature on the last page alongside the tenant signatures, purporting to be the signature of a 'guarantor.' But what is the guarantor actually guaranteeing against? In this case, absolutely nothing!!
There is no point in getting a guarantor to sign the last page of the tenancy agreement along with the tenants, unless the guarantor is expressly agreeing to their own specific obligations. Ideally, landlords should get any prospective guarantor to sign a specific guarantor agreement. This should clearly set out what the guarantor is agreeing to provide a guarantee against. This may include:
- non-payment of rent by the tenants
- a tenant failing to fulfil any of their obligations under the lease
- losses to the landlord such as any costs incurred for damage by the tenant and replacement of missing items (so long as the tenant has specific obligations in relation to these things in their tenancy agreement)
The lease to which the guarantor agreement refers should be attached to the guarantor agreement. The guarantor should be provided with a copy of both the guarantor agreement and the attached lease, so that they are clear as to what their obligations are. The guarantor agreement should also make clear that it will remain in place until such times as the tenancy agreement is terminated.
If you want your own guarantor agreement checked over, or want to discuss any of the above issues further, please contact our team.