Is one tenant's Guarantor liable for other co-tenant?

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    Is one tenant's Guarantor liable for other co-tenant?

    Looks a really useful forum. I hope that someone here can provide advice on liability as guarantor for a residential letting where my nephew is co-tenant (no problems with his rent) but he has a new co-tenant (who I have never met and have no connection with) who in arrears with his rent and has been so before. There are only the two of them. This new tenant has only been sharing the flat for four months but so far has missed rent on three of them, and then paid those and now missed the latest one. I have just received a letter from the agents says that they will be starting county court proceedings as next step.

    The original lease was for 12 months and named my nephew and a different (solvent) friend who left the country after six months. These are the people named in the guarantee agreement that I signed. A further agreement was sent to me when that friend moved out and a new one moved in. But I had no prior knowledge of this change and because I was waiting for information from my nephew I did not in fact sign that contact. Months have passed and I have had no communications with the letting agents at all since original signing. By now I of course don't want to sign anything with his feckless freinds name on it.

    Will I be liable for the non-payment of rent and other costs for this co-tenant on the same basis as this guy's own guarantor (who is his mother)? Is this the case even though the contract that I signed was for my nephew and an entirely different person?

    I don’t want my nephew to become homeless over this, but neither do I want to pay debts for someone that I never vouched for on an on-going basis.

    Have I effectively vouched for whoever he decides to share with? That was a complication that I did not envisage.

    Hope you can advise me.

    Chris

    #2
    The problem is that what you call "co-tenants" are the two joint tenants of the entire premises. They are jointly and severally liable for 100% of the rent, even if - in practice- they pay half each. You as Guarantor guarantee your nephew's compliance; and, in turn, he's potentially liable for 100% of the rent if the co-tenant fails
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


      #3
      Thanks - could you tell me who coughs up first?

      Jeffrey

      Thanks for that clear (if unwelcome) advice. I assume from this that the debt is my nephew's in the first instance. If he can't pay then I will be called on (in that order).

      This would at least make him clear that its a problem for him and not just for me. It would also suggest that the agents would try to get him to pay (and see it as his debt) before they pursue his friend's mother (i.e. the other guarantor) for the money.

      Or do we all four end up at the courts together and the most solvent one writes the cheque?

      Chris

      Comment


        #4
        More unwelcome news I'm afraid. LL can pursue either: -

        1. The tenant that has failed to pay
        2. Your nephew
        3. The other guarantor
        4. You

        There is no order the LL must go in - he would be best advised to go after the person who is most likely to be able to pay. This means you and the other guarantor are likely to be in his sights, although he could take the blunderbuss approach and sue all 4 of you. He will not care who pays as long as someone does and if no-one does he will get a CCJ against all 4 and then choose who to enforce against.

        Sorry

        I should add this: -

        if nephew pays all arrears he can sue the defaulting T if its worth it. If you pay to settle you can sue T or N for loss. It could be possible that if the other guarantor pays she can sue N.

        You say there are 2 guarantors is there just one tenancy agreement or two. If there are 2 agreements have you guaranteed your nephew and the other guarantor guaranteed the other T? This may change things...
        PAUL GIBBS, solicitor, Jacobs & Reeves. My comments on this forum are correct to the best of my knowledge and belief. No responsibility or liability is accepted by reason of reliance upon such comments. This disclaimer would not apply to direct clients of Jacobs & Reeves where there is a valid retainer in place and I would be happy to confirm any advice if formally instructed. . Jacobs & Reeves now offer a fixed fee possession service.

        Comment


          #5
          I think we need to establish if the tenancy you agreed to guarantee still exists. When the new co-tenant moved in what happened precisely? Was a new tenancy agreement drawn up?

          Comment


            #6
            A couple of thoughts

            There are a couple of things that you could consider that might reduce or eliminate your liability.

            1. As per lots of previous postings here for gurantors to be held liable it is recommended that they are given the original AST to read and consider before signing the guarantee - if this did not happen arguing that you did not fully undertand your liability might be succesful.

            2. Your original guarantee may have said something along the lines that you guarantee your nephew as long as the original AST or any renewal or periodic tenancy that follows on exists. You could perhaps argue that when the first tenant moved out and was replaced that created an entirely new and unrelated agreement and it was necessary for you to agree again in order to be bound. This is superfically supported by the following:

            1. You were aware of the joint and several nature of your liability and you were happy to enter into the original guarantee based on the 2 tenants then named in the agreement you read (the original AST) - by allowing a different tenant to enter into the picture the agent/landlord has materially changed what you are guaranteeing without your consent or agreement and your original guarantee can therfore only be enforced if the original agreement or a direct follow on (including all the same tenants) is in place.

            2. The fact that they sent you another gurantee form when the tenant changed and required you to sign is supporting evidence that the LA/landlord acknowledges this.

            3. As has been correctly pointed out above there are a number of parties that could be pursued of which you are only one - if you are the easiest target they will come after you so the first step is make yourself a more difficult target which might be acheived by making clear that you will be fighting this vigorously and pursuing them for costs when you win (of which you are confident). - this dosn't of course bind you to doing so when the time comes - you just want to make it aparently less risky for them to pursue, for example, the other guarantor.

            Depending on the sums involved it is probably worth taking formal legal advice on whether this approach has any merit in your specific case. For example the exact wording of the guarantee may be critical.

            Comment


              #7
              Thanks, thanks, thanks. Just what I needed.

              Paul Gibbs, Lawcrucher and fletchj

              What good guys you are. I am indeed the most solvent so I will take precautions and advice. I've also checked with my nephew. Effectively what happened was he (N) and the original flatmate (S) shared until Sept 2008 (just under a year from when they moved in). A new tenant (R) moved in then and they have a new agreement which runs from November.

              At this stage having been told nothing about this by my oh-so-considerate nephew the agents sent me a new agreement to sign which I did not at that time because I was trying to get in contact with the R's mother (his guarantor) to find out whether we could each guarantee our own rather that the whole. This did not happen and in December I realised - when the three month warning about rent arrived - that I had not actually signed. I have not signed since and have not been in contact with the agents either.

              Its sounding to me like there is now a new agreement in place which I am not party to but I will read the AST.

              I am comfortable with arguing as fletchj suggests.

              Great and very quick advice. Thanks

              Chris

              Comment


                #8
                Originally posted by fletchj View Post
                There are a couple of things that you could consider that might reduce or eliminate your liability.

                1. As per lots of previous postings here for gurantors to be held liable it is recommended that they are given the original AST to read and consider before signing the guarantee - if this did not happen arguing that you did not fully undertand your liability might be succesful. I disagree if you are not sure what you are signing you should not sign - IMO its not likely this argument will get you very far

                2. Your original guarantee may have said something along the lines that you guarantee your nephew as long as the original AST or any renewal or periodic tenancy that follows on exists. You could perhaps argue that when the first tenant moved out and was replaced that created an entirely new and unrelated agreement and it was necessary for you to agree again in order to be bound. This is superfically supported by the following:

                1. You were aware of the joint and several nature of your liability and you were happy to enter into the original guarantee based on the 2 tenants then named in the agreement you read (the original AST) - by allowing a different tenant to enter into the picture the agent/landlord has materially changed what you are guaranteeing without your consent or agreement and your original guarantee can therfore only be enforced if the original agreement or a direct follow on (including all the same tenants) is in place. Agree that the form of the guarantee and the wording within the agreement may give rise to a claim - as Lawcruncher said the tenancy agreement to which your guarantee attaches may have ceased thus ending your liability

                2. The fact that they sent you another gurantee form when the tenant changed and required you to sign is supporting evidence that the LA/landlord acknowledges this. Possibly but not conclusive

                3. As has been correctly pointed out above there are a number of parties that could be pursued of which you are only one - if you are the easiest target they will come after you so the first step is make yourself a more difficult target which might be acheived by making clear that you will be fighting this vigorously and pursuing them for costs when you win (of which you are confident). - this dosn't of course bind you to doing so when the time comes - you just want to make it aparently less risky for them to pursue, for example, the other guarantor.

                Depending on the sums involved it is probably worth taking formal legal advice on whether this approach has any merit in your specific case. For example the exact wording of the guarantee may be critical. - I agree the wording is going to be critical as is a precise chronology of what exactly happened with regards to a change in the tenancy
                My understanding of your post is now: -

                1.N and S entered into a tenancy agreement under which you were a guarantor. Please confirm the date it commenced, and the period it was to run for.

                When the new tenant moved in N and R entered into a new tenancy agreement with LL. R's mother is a guarantor. Have you signed any agreement relating to this new agreement?

                If I understand your situation correctly then it sounds like your liability as guarantor is only in respect of the original tenancy agreement. this means that once it expired or was determined (need to clearly understnad how the old tenancy ended) your liability ceased.

                If you have not yet guaranteed N and R under new agreement then do not sign! It appears you may have no liability.

                Are you able to quote exactly what it states under the guarantee section?
                PAUL GIBBS, solicitor, Jacobs & Reeves. My comments on this forum are correct to the best of my knowledge and belief. No responsibility or liability is accepted by reason of reliance upon such comments. This disclaimer would not apply to direct clients of Jacobs & Reeves where there is a valid retainer in place and I would be happy to confirm any advice if formally instructed. . Jacobs & Reeves now offer a fixed fee possession service.

                Comment


                  #9
                  What the covering letter says

                  My correspondance filing is pretty awful so I cannot find the original agreement but by my calculations N moved into the property on during the week beginning 8.10.07 as I was asking for sight of the agreement urgently that week having not been involved until the 5th because my mother (who had agreed to do this) was on holiday. Which is how I got drafted in.

                  However I have found the covering letter and the agreement of guarantee that were sent more recently and which run from 10th November.

                  The letter addresses me as though this is a completely new contact and it addresses me personally so its not a copy of the one that they sent to R's mother (the other guarantor) ...

                  'We understand from the prospective tenants of the above property that you have agreed to stand as their guarantor'. That does make it sound as though it is not a continuation ...

                  It says that there are enclosed two copies of the Agreement of Guarantee together with a copy of the Tenancy Agreement. I do not think that they did this. I think that only the Agreement of Guarantee was enclosed (a single copy). Which does make me think that perhaps they considered me already committed to this agreement despite the wording of the letter?

                  What catches my eye is the phrase "We must advise that if we are not in receipt of the signed document when the proposed tenancy will be unable to proceed". I did not sign, did not contact them and they did not contact me. Does this sound helpful?

                  Looking at the agreement (and assuming that this is the same as the one I signed before) it gives the names of both N+R and describes these as 'The Tenant' and tells me that I am guaranteeing in consideration of the request to accept them as tenant of the property. It tells me all sorts of things then that I am bound by if the 'Tenant' does this or that. But if the original contract is the same then the 'Tenant' I signed for is N+S and not N+R.

                  The part that I do not understand is "If the Tenant surrenders any part of the property to the landlord and the landlord accepts that partial surrender the guarantor's liability will continue in respect of the part not surrendered. Any liability accrued at the date of surrender will stand". Does this mean that I bound by the new Tenant?

                  Will it be significant that the old tendancy ended in mid-October and this one starts in mid-November? I am assuming that this may have been covered by an extension so there may have been no actual break. I will need to check with N.

                  Really appreciating the help so far.

                  Chris

                  Comment


                    #10
                    You asked how long the original agreement was for and it was to run 12 months with a 6 month break point. Hope that helps.

                    C

                    Comment


                      #11
                      Hi

                      On the basis of all the information you have provided and assuming that your nephew and his new friend actually signed the fresh agreement that was sent to them, it seems pretty clear to me that they have been granted a new tenancy and that you are not a guarantor for this new tenancy. It is up to them to prove that you are, so ask them for the evidence.

                      Preston

                      Comment


                        #12
                        Originally posted by Chris_PD View Post
                        The part that I do not understand is "If the Tenant surrenders any part of the property to the landlord and the landlord accepts that partial surrender the guarantor's liability will continue in respect of the part not surrendered. Any liability accrued at the date of surrender will stand". Does this mean that I bound by the new Tenant?
                        No. That part covers only the case where:
                        a. T hands-back (by an agreed partial surrender) part of the premises; but
                        b. retains the residue of the premises. The Guarantee would continue to operate so far as concerns this residue.
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment


                          #13
                          So was this partial surrender?

                          Originally posted by jeffrey View Post
                          No. That part covers only the case where:
                          a. T hands-back (by an agreed partial surrender) part of the premises; but
                          b. retains the residue of the premises. The Guarantee would continue to operate so far as concerns this residue.
                          Well I'm hoping that the tenancy ran its term, there was a break and a new tenancy which I have not agreed to guarantee.

                          But just in case ... could I ask whether it could be argued that S surrendered his part of the tenancy (effectively his room) and that means that the only part that I would be liable for (if this were a continuation of the original agreement) is the part that the T did not surrender (i.e. that which relates to my N). No problems with guaranteeing his share.

                          Hopeful

                          Chris

                          Comment


                            #14
                            Yes- it could be argued, if it's so- but everything would depend on the circumstances.
                            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                            4. *- Contact info: click on my name (blue-highlight link).

                            Comment


                              #15
                              If the original pair were joint tenants, wouldn't the leaving of one have ended the tenancy then and there?
                              I offer no guarantee that anything I say is correct. wysiwyg

                              Comment

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