Guarantor (Surety) Agreement

Landlords should ask for a guarantor if there are any doubts about the tenant’s ability to fulfill his or her tenancy obligations but where the landlord still wants to take him/her on as a tenant. This is usually where the tenant does not meet one or more of the following requirements:

1 Has not lived at the present address for more than 6 months
2 Has not worked for present employer for more than 6 months
3 Is a student
4 Is below the age of 21
5 Has a low or non-existent credit score

A guarantor guarantees (underwrites) the tenant’s obligations; to pay rent, to pay for any damage, to pay for cleaning, any outstanding bills or any other tenancy related liabilities and is legally bound to do so by virtue of the guarantor agreement (contract).

For the landlord, having a guarantor is like having an insurance policy against the risk of a bad tenant. As with all insurance policies, claims against guarantors are on the increase. Landlords must therefore verify their guarantors in pretty much the same way they do a tenant:

1 Guarantors should be credit checked and referenced as you would a tenant
2 Guarantors should show that their earnings or resources are sufficient to pay all tenancy liabilities if necessary.
3 Guarantors should be home owners.
4 Guarantors are often relatives of the tenant, though this is not absolutely necessary.

Where you have a joint tenancy situation, for example a student house, all tenants are individually and severally liable for all tenancy liabilities. Therefore, a guarantor guaranteeing one of the tenants in effect is guaranteeing them all. Not all guarantors are aware of this and they may be unwilling to take on this responsibility if they know. However, the risk is somewhat reduced where ALL the parents of a house of students act as guarantors, though in theory any single one of them could be held responsible.

Guarantors need to be verified just as you would a tenant. This means they need to complete a guarantor application form which is pretty much the same as a tenancy application.

Landlords should be aware that you cannot hold a guarantor liable for obligations he/she is not fully aware of, or for terms in an agreement which are deemed to be unfair. Therefore any tenancy agreement used should be up-to-date (meets Office of Fair Trading guidelines) and be explicit on the following points:

1 The tenancy referred to – full details of the property and its location.
2 The tenant/s referred to – full names of each tenant (having verified their identities).
3 The tenancy agreement and its obligations – the guarantor must be given ample opportunity to read and question the tenancy agreement on any points he / she does not understand BEFORE the agreement is signed and witnessed.

Guarantors MUST have seen and approved the tenancy agreement they are guaranteeing prior to the signing and they must also sign a Deed of Guarantee. This signing should be witnessed.

If the tenant defaults in the payment of rent or any of the other tenancy obligations the guarantor will pay the landlord.