Tenant and guarantor both in default

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  • Tenant and guarantor both in default

    Hi

    I'm letting a flat to a tenant under an AST through a letting agent.

    There is also a guarantor named on the AST agreement, who happens to also be living at the property (I only found out recently).

    The fixed term of the AST commenced in June 2008 and ended in December 2008 (6 months). The agent took it upon themselves and without my authorisation to extend the tenancy for a further 6 months so the fixed term now ends in June 2009.

    The tenant (and guarantor) defaulted on 2 months' rent (February and March 09) and I served a s.8 notice on her. The 2 week period has also elapsed and I have submitted a claim for possession.

    It does not look as though the tenant (or guarantor) will be able to pay the rents due either for the period already in arrears or the remaining months until the end of the fixed term.

    I have also served a s.21 notice which will end on the last day of the extended fixed term.

    Right now I am in serious financial difficulty as I need the rental income to cover mortgage repayments, while I myself rent elsewhere. And I find myself in a situation where I am effectively paying for the tenant (and guarantor) to stay in my house rent free.

    I have thought about the following solutions/remedies:

    1. I read about maybe sueing the guarantor for trespassing, since he is not a tenant and therefore has no rights of occupation, however it looks as though only the 'possessor' (i.e. the current tenant) is the right person to bring proceedings against the allged trespasser. Is this correct?

    2. Is there any way I could get an injunction against the guarantor to prohibit him from entering the property which would be effective before a successful order for possession? Given my financial predicament, I need to put new tenants in there right away, and if I manage to get the guarantor out, I'm sure the tenant will follow.

    3. I left the management of the property to my letting agents, since that's what I pay them to do, but having now looked through the paperwork surrounding the tenancy, I think I may have cause for bringing an action against them for negligence. The tenant earns only enough per month to cover the costs of the rent. The guarantor also earns quite little. I was not made aware of the tenant's poor financial situation at the time. I think also that the guarantor wasn't able to be a tenant because he had a 0 credit history score (presumably because he has no credit history?). Surely the agents should have at least told me that there may be a risk involved?

    I also didn't want them to renew the tenancy after 6 months but they went ahead anyway.

    4. I have now spoken to the tenants to try and put pressure on them to leave. They appear to know their rights however and literally laugh at any attempts made to convince them they should leave (i.e. explaining to them the adverse affects of having a CCJ against their names); they seem completely unphased about the whole situation. I believe they are from Africa and I also suspect, given their attitude to the whole thing, that they will sit out in my house for as long as they can, without paying any rent, and then return to Africa safe in the knowledge that I won't be able to track them down to pursue the rent arrears. Is there anything I can do to secure the rent payments in light of the possibility that they will do a runner?

    5. The letting agents didn't offer me rent arrears insurance. Are they obliged to?

    Many thanks for your help.

    Andrew

  • #2
    in same situation. read contract between you and the agent carefully, does it mentioned about rent insurance? they don't have to buy the insurance for you, unless you required.

    Comment


    • #3
      Originally posted by amp82 View Post
      1. I read about maybe sueing the guarantor for trespassing, since he is not a tenant and therefore has no rights of occupation, however it looks as though only the 'possessor' (i.e. the current tenant) is the right person to bring proceedings against the allged trespasser. Is this correct?

      Yes

      2. Is there any way I could get an injunction against the guarantor to prohibit him from entering the property which would be effective before a successful order for possession? Given my financial predicament, I need to put new tenants in there right away, and if I manage to get the guarantor out, I'm sure the tenant will follow.

      Not unless there is something extreme taking place, for example, that they are damaging the property

      3. I left the management of the property to my letting agents, since that's what I pay them to do, but having now looked through the paperwork surrounding the tenancy, I think I may have cause for bringing an action against them for negligence. The tenant earns only enough per month to cover the costs of the rent. The guarantor also earns quite little. I was not made aware of the tenant's poor financial situation at the time. I think also that the guarantor wasn't able to be a tenant because he had a 0 credit history score (presumably because he has no credit history?). Surely the agents should have at least told me that there may be a risk involved?

      I think this depends very much on what your agreement with them says.

      I also didn't want them to renew the tenancy after 6 months but they went ahead anyway.

      This also depends upon your agreement with them, but unless the agreement clearly gives them authority to do this, then they should not have done so and their actions may well be negligent.

      4. I have now spoken to the tenants to try and put pressure on them to leave. They appear to know their rights however and literally laugh at any attempts made to convince them they should leave (i.e. explaining to them the adverse affects of having a CCJ against their names); they seem completely unphased about the whole situation. I believe they are from Africa and I also suspect, given their attitude to the whole thing, that they will sit out in my house for as long as they can, without paying any rent, and then return to Africa safe in the knowledge that I won't be able to track them down to pursue the rent arrears. Is there anything I can do to secure the rent payments in light of the possibility that they will do a runner?

      Only what you have already started doing, namely, applying for a possession order. By all means ask the tenants for the money they owe you on a regular basis and preferably confirm this in writing each time; but be careful not to "pressurise" or harass them into leaving as this could constitute an offence under the Protection from Eviction Act 1977.

      5. The letting agents didn't offer me rent arrears insurance. Are they obliged to?

      Not in law. Whether there is anything in their professional code of practice on this issue, others may be able to answer.
      Hi, see above.

      Preston

      Comment


      • #4
        Hi longpo, Preston

        Many thanks for your replies.

        Is there nothing else I can do to improve the situation? I can't afford to be so many months' rent out of pocket and then have no way of getting the money back.

        It seems that a tenant can effectively live rent free for at least 6 months and then leave the country, washing their hands of their responsibility to pay me! I'm shocked at how poor the law is in dealing with these matters. I can't possibly be the first landlord in history to be faced with this scenario!? It's and absolute disgrace!

        Comment


        • #5
          Originally posted by amp82 View Post
          Is there nothing else I can do to improve the situation? I can't afford to be so many months' rent out of pocket and then have no way of getting the money back.
          So what alternative would you propose to replace the present law?
          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


          • #6
            Originally posted by jeffrey View Post
            So what alternative would you propose to replace the present law?
            Automatic eviction after 3 months' rent arrears at the discretion of the landlord, no questions, no ifs, no buts. Enforceable by the 'plastic policement'; at least then they'd finally have some purpose. Powers to repossess non-essential items of value as collateral for outstanding rent.

            Opportunity for tenant to pay within 1 month of 2 months' arrears. In the meantime, landlord can serve notice on tenant and provide proof of rent arrears to a streamlined tribunal.

            Comment


            • #7
              Originally posted by amp82 View Post
              Automatic eviction after 3 months' rent arrears at the discretion of the landlord, no questions, no ifs, no buts. Enforceable by the 'plastic policement'; at least then they'd finally have some purpose. Powers to repossess non-essential items of value as collateral for outstanding rent.

              Opportunity for tenant to pay within 1 month of 2 months' arrears. In the meantime, landlord can serve notice on tenant and provide proof of rent arrears to a streamlined tribunal.
              Well, dream on (or become Prime Minister!)
              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


              • #8
                Well, you wanted to hear my proposal so you got it. No need for irritating comments.

                Comment


                • #9
                  Originally posted by jeffrey View Post
                  So what alternative would you propose to replace the present law?
                  Well if it was up to me, I would cut the time it takes to jump through each hoop.

                  2 weeks notice period is fair for Section 8
                  Court date to move from an average of 6- 8 weeks to 2 weeks.
                  Bailiff appointments to be available within 2 weeks.

                  And prospects of doing prison time for tenant’s that don’t pay the county court judgement.

                  Comment


                  • #10
                    Originally posted by amp82 View Post
                    Well, you wanted to hear my proposal so you got it. No need for irritating comments.
                    I was merely intriged how you would square the circle. The problem is not new; and no-one has yet solved it equitably.
                    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


                    • #11
                      Originally posted by jeffrey View Post
                      I was merely intriged how you would square the circle. The problem is not new; and no-one has yet solved it equitably.
                      Yes well, there are better ways of conveying your interest.

                      Nevertheless, I'm still stuck with a pair of parasites in my house and no way of getting rif of them!

                      Comment

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