Guarantor being taken to Court

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  • Lawcruncher
    replied
    Originally posted by MdeB View Post

    That just seems to say that the guarantee is not invalid if the consideration is not stated in a written document.
    Indeed. Until the section came to my attention I always assumed that if the document was not a deed that the consideration needed to be stated. The puzzle is how you are going to prove what the consideration is if it is not in writing.

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  • MdeB
    replied
    Originally posted by Lawcruncher View Post
    The landlord may not know about section 3 of the Mercantile Law Amendment Act 1856 - it never came to my notice during 30 odd years in the law!
    That just seems to say that the guarantee is not invalid if the consideration is not stated in a written document.

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  • jpkeates
    replied
    "10(3) Subject to regulation 9, prior to the conclusion of a contract for the supply of services, the supplier shall inform the consumer in writing or in another durable medium which is available and accessible to the consumer that, unless the parties agree otherwise, he will not be able to cancel the contract under regulation 10 once the performance of the services has begun with his agreement."
    Is a partial opt out, of the right to cancel at least.

    Although it's undermined in this guarantor agreement which tries to opt out of the legislation that allows the opt out!

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  • KTC
    replied
    http://www.legislation.gov.uk/uksi/2...lation/25/made

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  • jpkeates
    replied
    Originally posted by Lawcruncher View Post
    7. I have not checked whether you can opt out of the Regulations.
    That's an interesting point.

    You can't opt out of the distance selling regulations, although there are contracts to which the act doesn't apply.
    They don't apply to contracts for interests in land, but rental contracts are specifically noted as being subject to the regulations.

    There doesn't seem any way that this agreement can be excluded otherwise.

    While the right to cancel is no academic, there's a long list of information that has to be supplied by a supplier (which would be the landlord/agent) for the contract to be valid, which includes how long the agreement lasts.

    That might turn out to be quite a fruitful line of enquiry.

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  • Lawcruncher
    replied
    Observations on the guarantee clauses:

    1. There has to be doubt about whether you can guarantee something which does not exist when you sign the guarantee. As to the consideration expressed see here: http://swarblaw.co.uk/viewtopic.php?f=24&t=9971. The phrase "act for the tenant" just about passes muster.

    2. This allows the landlord to slip in a tenant unknown to the guarantor.

    3. Quite inappropriate.

    4. "The Rent" is not (as implied by the capital letter) defined. However, it has to be implicit that it means the rent payable under the tenancy. Otherwise the clause is fine subject to clause 6.

    5. No comment.

    6. This could unravel the whole thing. "Whichever is the longer" should be "whichever is the earlier", but that is not what is potentially fatal. Clause 4 say the guarantor has to cover any unpaid rent. "Rent" has to mean the rent payable under the agreement yet to be entered into. This clause seeks to extend it to all future rent payable in respect of the property by the tenant. tThat brings in again the above point: There has to be doubt about whether you can guarantee something which does not exist when you sign the guarantee. Apart from that, whilst it is legally possible to guarantee an arrangement that continues indefinitely (e.g. a periodic tenancy) the guarantor needs to understand very clearly that that is what he is undertaking. In this case the guarantor made it clear he was only willing to cover a fixed term, so the guarantee does not reflect what was agreed. Can clause 6 be hived off to leave clause 4 to stand on its own? I would suggest not as the clear intention is to impose a single obligation so that if clause 6 is found to be unreasonable clause 4 (and accordingly the whole guarantee) falls with it. Of course if the guarantee fails anyway because you cannot guarantee something which does not exist at the date of the guarantee the question is academic.

    7. I have not checked whether you can opt out of the Regulations.

    8. It seems that the agreement entered into was not in the same form as the copy supplied. That has to be another string to the guarantor's bow, especially if the differences are significant.

    9. No comment.

    The document was not executed as a deed nor was any consideration expressed. The point is well worth making. The landlord may not know about section 3 of the Mercantile Law Amendment Act 1856 - it never came to my notice during 30 odd years in the law!

    A reasonable case can be be made that the guarantee is unenforceable. It will be down to convincing a judge.

    Even if the landlord wins, the form of guarantee still has to be classed as inadequate as it allows so many arguments that it is unenforceable. Agents should be making sure that the legal documents they use are as watertight as possible and that they follow recommended procedure. If agents prepare inadequate legal documents they are liable for any loss the client suffers as a consequence to the same extent as a lawyer would be.

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  • JK0
    replied
    Any landlord using an agent to find a tenant is more or less forced to use agent's proceedures and paperwork, and to trust that they have been done correctly. That they usually do foul it up in some way makes it unlikely I and I suspect many others would accept a tenant requiring one that applies to an agent. Be careful what you wish for, lefties.

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  • Lawcruncher
    replied
    Originally posted by JK0 View Post
    However, those of you giving advice to o/p on how to avoid paying up are making it more difficult for any landlord to ever trust a tenancy guarantee in future, by putting your suggestions online forever.
    Either we are going to give all posters our opinion of the legal position or we are not. I say it like I see it whether the poster is landlord or tenant.

    As others have suggested, failing to point out a defect in a guarantee actually does landlords a disservice as well doing the poster a service.

    As a general principle people should keep to the bargains they make. The principle is not though absolute. Lady Hale summed it up when she said that the law allows you to make an unwise decision, but not an uninformed one.

    If you choose your guarantor carefully, have a well-drafted guarantee which does not try to stitch up the guarantor and follow recommended procedure, you should be able to rely on your guarantee. If you do not do things properly you cannot complain if the guarantor discovers he has a get-out.

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  • buzzard1994
    replied
    Originally posted by JK0 View Post
    I have every sympathy for o/p having such a delinquent family. However, those of you giving advice to o/p on how to avoid paying up are making it more difficult for any landlord to ever trust a tenancy guarantee in future, by putting your suggestions online forever.
    Actually we are helping landlords, by explaining what pitfalls to avoid if you want to have an enforceable guarantee. In this case the guarantor has been unwise in asking to see the tenancy agreement when they'd have a stronger case if they had not and in seeking to vary the agreement when they'd find the court more sympathetic if they clearly didnt know what they were doing.. The agent has no duty of care to the guarantor and gave them the opportunity to opt out, which they failed to take.

    The contract term attempting to bind the guarantor forever is most likely unenforceable, unfortunately one bad term does not invalidate the whole contract. A guarantor can write terminating the agreement at the end of the fixed term, they should take legal advice on this urgently as by seeking to terminate an agreement you agree one exists unless you phrase in terms of I dont accept a valid contract exists but if it should be deemed by a court to have been valid I now terminate the agreement (legal advice needed on wording).

    Whether the guarantor can be said to have received the tenancy agreement before they signed is debatable and depends on the extent of the differences from the proforma. I suspect they wont be material enough - but that is where they need professional advice. Unfortunately in offering to pay later they seem to have admitted to a debt they might, with legal advice, have been able to deny.

    There has been talk of SIL and MIL - but what of the SIL's husband or the FIL? The debt is due firstly from the tenants. If I have this right it must be the sister of the guarantor's husband - what is his role in this, he should be exerting pressure on the tenants to pay? If SIL's husband is still earning why is he not paying something? The landlord should first be attempting to recover the money due from their tenants and the guarantor should be making it clear to the tenants that they will have to try and recover the money from the tenants if they have have to pay up.

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  • leaseholder64
    replied
    Originally posted by JK0 View Post
    I have every sympathy for o/p having such a delinquent family. However, those of you giving advice to o/p on how to avoid paying up are making it more difficult for any landlord to ever trust a tenancy guarantee in future, by putting your suggestions online forever.
    I'm afraid that is just something that goes with the very light censorship that the internet brings. You will also find a lot of advice on these forums on how to avoid various leasehold charges (albeit some of which really are unreasonable), and bypass leasehold covenants.

    The only effective way to counter such things is to explain the impact of following the advice, rather than to ask people to self censor.

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  • JK0
    replied
    I have every sympathy for o/p having such a delinquent family. However, those of you giving advice to o/p on how to avoid paying up are making it more difficult for any landlord to ever trust a tenancy guarantee in future, by putting your suggestions online forever.

    Leave a comment:


  • jpkeates
    replied
    I would get some proper legal advice.
    My concern is that your interaction with the agent and landlord makes the agreement more enforceable because you are confirming that you are bound by it.

    You also want to make sure that you make every attempt to recover your loss from your sister in law (who may not have considered that possibility).

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  • IMustBeAMug
    replied
    Thanks jpkeates I did receive a 7 day demand for overdue rent from the LL via email and post, which also notified me of a Section 8 and Section 21 notice being served on the tenants. I replied to his email explaining that I could not pay the money within 7 days. We later spoke and it was understood that I would not make any payment before they were evicted as we both wanted them out of the house as soon as possible and if I was to make a part payment before the Court hearing the Section 8 could not go ahead as they would no longer be over 2 months in rent arrears.

    Prior to me receiving the 7 day demand he had attempted to get the money owed from the tenants and was always promised it would be paid at a later date, that some money would be paid by such and such a date and then of course that date came and went and not one penny had been paid by the tenants. Lots of false promises

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  • jpkeates
    replied
    Originally posted by IMustBeAMug View Post
    The LA should have a duty of care to the LL that the Guarantor will be in a position to pay if the tenants default on their rent payments.
    They probably do, but that duty is owed to the landlord, not the guarantor.

    Anyway.
    That agreement is going to be tough to enforce if you stress that it isn't a valid contract. There is no consideration for the agreement, other than your promise to do something in a situation you believed was not going to happen.
    So get some legal advice as soon as you can - it will be cheaper than paying the landlord/agent.

    Did the landlord/agent make written demands for payment of rent, and was that after they had demanded that amount from the tenant?

    I would query with your solicitor about attending the court session at all. If it is for repossession, you are not involved. If it for repossession and rent arrears, I am not sure that you should be involved either. Any claim against you should be a separate matter, once the tenant's debt is agreed.


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  • leaseholder64
    replied
    Any duty of the agent is to the landlord, not to you. Owning the house means that they take the default, plus interest, from you when you sell the house, so their cash flow position may not be good, but their balance sheet position is secure.

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