Guarantors before signing?

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    Guarantors before signing?

    I have a standard AST from a legal staitioners and a seperate guarantor form. The guarantor form says it must be signed before the tenancy agreement or it won't be valid. Someone explained it to me but I didn't fully understand. Is it something to do with the fact that the guarantee is a consideration that the tenacy would not be granted without it? i.e. if the tenacy agreement has already been signed then why should the tenant bother to get a guarantor? Please explain why forms signed after the tenancy agreement would not be valid?

    The problem is that the delay in getting back guarantor forms can give time to the prospective tenants to change their mind and rent elsewhere. Also, the guarantors usually quibble about joint and several liability.

    Is it possible to add a break clause in the tenancy agreement entitling the landlord to tear it up if he doesn't get back the guarantee with in 14 days?

    How about a seperate agreement with the prospective tenants to reserve the property subject to guarntor forms being duly returned and pay a reservation fee which is non refundable of say £100? If the forms are returned before the 14 day deadline the tenancy agreement is then signed and the usual deposit paid and the £100 can be deducted from the rent due.
    If the tenant changes his mind or the guarantors are not forthcoming, the landlord can keep the £100 and look for new tenants?

    Would this be unfair as the guarantors would not have had sight of the contract or forms before the prospective tenants pay the £100?

    Any suggestions?

    #2
    A Deed of Guarantee:
    a. does not need supporting by contractual consideration (as it's a Deed); and
    b. can be executed before or after the AST. 'After' is better (because there's nothing that G can guarantee unless and until the AST is in force) but the gap should be as short as possible (in case T enters into the AST but then G refuses to enter into the Deed)!
    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
      Originally posted by bureaucrazy View Post
      Is it possible to add a break clause in the tenancy agreement entitling the landlord to tear it up if he doesn't get back the guarantee with in 14 days?
      Yes (it's possible) but no (it wouldn't work; even if L tries to use it, s.5(2) of the Housing Act 1988 would apply and an SPT would arise).
      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


        #4
        Originally posted by jeffrey View Post
        Yes (it's possible) but no (it wouldn't work; even if L tries to use it, s.5(2) of the Housing Act 1988 would apply and an SPT would arise).
        What - even if the tenancy had not begun, i.e. T had not moved in?
        'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

        Comment


          #5
          It is not necessary to worry about legal niceties, you just need to get the procedure right. Although we often refer to "signing" there are two stages to a deed. The first is when it is executed, that is signed and witnessed, and the second is when it is completed and takes effect, which in almost all cases can be taken to be when it is dated. You can therefore get the guarantee signed but keep it undated until the tenancy agreement has been dated. If both are dated the same day the law deems them to have been completed in the order necessary for them to take effect.

          Comment


            #6
            Originally posted by Lawcruncher View Post
            It is not necessary to worry about legal niceties, you just need to get the procedure right. Although we often refer to "signing" there are two stages to a deed. The first is when it is executed, that is signed and witnessed, and the second is when it is completed and takes effect, which in almost all cases can be taken to be when it is dated. You can therefore get the guarantee signed but keep it undated until the tenancy agreement has been dated. If both are dated the same day the law deems them to have been completed in the order necessary for them to take effect.
            That sounds like a sensible idea.
            'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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