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Powell
14-07-2011, 13:57 PM
Does anyone know if there is a cooling off period for a guarantor? I know there is not one for tenancy agreements.

I have had a tenant move into a property with a Guarantor. Now they are in, the Guarantor says they no longer want to do it and can change their minds using the 14 day cooling off period.

The forms were issued in the post - I have read this may make a difference to if they were signed in person.

Lawcruncher
14-07-2011, 14:49 PM
Unless the transaction was wholly conluded by a "means of distance communication" the right to cancel under the Consumer Protection (Distance Selling) Regulations 2000 does not apply. An indication of what constitutes a "means of distance communication" can be found in Schedule 1 to the Regulations, which can be found here (http://www.legislation.gov.uk/uksi/2000/2334/contents/made).

Accordingly if the transaction was negotiated "in the normal way" and all that happened was that the documents were sent in the post, there is no right to cancel.

Powell
14-07-2011, 15:27 PM
I am sorry, but I am finding that a little unclear.

The whole 'transaction' was carried out through the post. The tenant provided the Guarantors details and I wrote to them with the contract etc.

Is that a "means of distance communication" or was it negotiated "in the normal way"

JK0
14-07-2011, 15:38 PM
That's a good one:

Tenant and guarantor agree a letting starting in a week's time, and tenant moves in. Then guarantor attempts to invoke 14 day cooling off period.

It's a lot of nonsense Powell. There is no cooling off period for guarantors.

This looks more like attempted fraud to me.

Powell
14-07-2011, 15:42 PM
It is a good one. Just when you think you ave heard it all........

Lawcruncher
14-07-2011, 15:43 PM
That may complicate it.

I am no expert on the regulations but have just had a quick run through them. Before considering the matter in detail I have a question: in what form did the guarantor give notice of his intention to cancel?

JK0
14-07-2011, 15:53 PM
This thread popped up at the bottom which seems relevant:http://www.landlordzone.co.uk/forums/showthread.php?38621-7-day-cooling-off-period-for-tenants-signing-away-from-the-office

Powell
14-07-2011, 16:27 PM
I received a letter stating that they no longer wish considered as a guarantor.

I will also mention, I do not think it has any relevance, that the Guarantor initially was told that he must be a homeowner. When the signed contract was returned, I checked on the land registry to see if he was and it is his partner that owns the property. I then contacted them to be a joint Guarantor and they refused - the tenant is the daughter of the non-homeowner only. I agreed to the father to be the sole guarantor.

Today's letter states that they did not give their consent to 'search the property'. As far as I am aware, a Land Registry search is open to anyone and no permission is required.

oaktree
14-07-2011, 16:44 PM
Does the right to a cooling off period, assuming the right to cancel hadn't been specifically included in this agreement, not fall by the wayside in the event that the tenancy has already begun as long as the guarantor had been advised of such?

Lawcruncher
14-07-2011, 17:36 PM
I just wanted to check that the notice was in writing as required.

The obvious point to make is that if the notice was effective there is nothing you can do about it. I suggest writing to the guarantor as follows:

Thank you for your letter of...

I do not accept that the Consumer Protection (Distance Selling) Regulations 2000 apply to your guarantee. If [insert tenant's name] does not comply with his obligations under the tenancy agreement I shall look to you to meet your obligations under the guarantee. If you fail to do so the court will have to decide the issue.

The following points occur to me:

1. Is a guarantee a contract at all? It could be argued that the essence of a contract is that it imposes mutual obligations. A guarantee is very much one way traffic.

2. If it is a contract, is it one to which the Regulations apply? The contract has to be one "concerning goods or services". What goods or services are you supplying to the guarantor?

JK0
14-07-2011, 17:47 PM
Beware folks about just having one parent as guarantor. I had a delinquent tenant many years ago who got just her father to guarantee, even though her mother was alive. The father had been diagnosed with terminal cancer, and the tenant calculated (correctly) that her father would be dead by the time I got round to asking him for money.

jta
14-07-2011, 18:15 PM
1. Is a guarantee a contract at all? It could be argued that the essence of a contract is that it imposes mutual obligations. A guarantee is very much one way traffic.



Didn't we have this discussion before? Regarding the consideration given to a guarantor which (I think) ended up with someone saying that the fact that the tenant got the property was consideration enough.

Lawcruncher
14-07-2011, 18:19 PM
Didn't we have this discussion before?

We did indeed.


Regarding the consideration given to a guarantor which (I think) ended up with someone saying that the fact that the tenant got the property was consideration enough.

I did not agree with them.

jta
14-07-2011, 18:24 PM
Maybe somebody could bump it, I can't find it.

Lawcruncher
14-07-2011, 19:00 PM
Maybe somebody could bump it, I can't find it.

It takes me ages to find anything so I am not looking for it.

Why are the search facilities on forums so useless?

johnboy
14-07-2011, 23:16 PM
I went on an advanced legal course for letting agents not so long ago and the instructor stated that there was a cooling off period for tenancy agreements and guarentor agreements if signed in the home of the tenant. I am not sure if that also meant the guarantor's home or the tenancy address (for the guarantor).

I have since had infomation from another "expert" who doesnt agree.

mariner
15-07-2011, 04:03 AM
AFAIK a Guarantor Agreement should be a signed Deed (contract) effective from date of signature/start of contract.
DSR provisions only apply to tel/email purchases to allow time for the buyer to inspect the product and reject it within 7 days.
Some contracts should llow a 14 day cooling off period if not signed on business premises, not sure if G contract is one.
I am reasonably certain that exchange of Contracts by Royal Mail is not subject to DSR provisions

Lawcruncher
15-07-2011, 08:02 AM
I went on an advanced legal course for letting agents

Not everything you are told on legal courses for letting agents whether elementary, intermediate or advanced is correct.

mind the gap
15-07-2011, 08:13 AM
If Guarantors are legally at liberty to extricate themselves from their commitment before the end of the period agreed in a Deed of Guarantee (whether or not the tenancy has actually begun) does this not suggest that there is no point in ever requiring a Guarantor as a condition of a tenancy's being granted?

Given that Guarantors are routinely required for student tenancies (many of which are posted out, signed and witnessed in the G's own home then posted back to the LL/agent), I am inclined to the conclusion (although I lack the legal knowlege to prove it), that the rules which apply to 'cooling off' periods in other kinds of contracts must not apply here.

The G gets something out of the arrangement - the peace of mind that their offspring/protégé will not have to sleep on a park bench - but it is impossible to quantify 'parental peace of mind' in the way that you can quantify a new Ford Mondeo or fitted bedroom furniture.

MrJohnnyB
15-07-2011, 09:30 AM
Beware folks about just having one parent as guarantor. I had a delinquent tenant many years ago who got just her father to guarantee, even though her mother was alive. The father had been diagnosed with terminal cancer, and the tenant calculated (correctly) that her father would be dead by the time I got round to asking him for money.

Could you not enforce against his estate?

mind the gap
15-07-2011, 09:43 AM
Could you not enforce against his estate?

Jeffrey once opined that a dead tenant's debts could/should be enforced against his estate, so in theory I cannot see why not.

johnboy
15-07-2011, 14:38 PM
Not everything you are told on legal courses for letting agents whether elementary, intermediate or advanced is correct.

I found that out a long time ago.
I use ARLA and another company for training course for myself and staff and it is suprising how often the advice is not the same. But it does make the course more interesting to bring up what other training courses are spouting out.

Lawcruncher
16-07-2011, 17:41 PM
Only someone familiar with the Regulations can answer the question with any authority. However, it is worth looking at the definition of "distance contract".

“distance contract” means any contract concerning goods or services concluded between a supplier and a consumer under an organised distance sales or service provision scheme run by the supplier who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded

And then at what the OFT says:

Businesses that normally sell by distance means and have systems in place for trading in this way (for example by having standard letters or emails that they send to consumers they deal with at a distance) need to comply with the Consumer Protection (Distance Selling) Regulations 2000.

*

The DSRs apply to your business if you sell goods or services without face-to-face contact with your consumer using an organised distance sale or service provision scheme for instance via:
the internet
text messaging
phone calls
faxing
interactive TV, or
mail order – via catalogues, mail order advertising in newspapers or magazines.

It would seem from the above that what is relevant is how the service is sold, rather than the means by which the contract is concluded.

JK0
16-07-2011, 17:52 PM
Hmm, but isn't one of the conditions of exercising your right to cancel that you return all goods supplied under the contract.

Surely the equivalent of this is that the tenant returns the keys to the property?

mind the gap
16-07-2011, 17:59 PM
Hmm, but isn't one of the conditions of exercising your right to cancel that you return all goods supplied under the contract.

Surely the equivalent of this is that the tenant returns the keys to the property?

I would not have thought so because the contract between the LL and the G does not involve keys.

Ians
16-07-2011, 19:32 PM
The ARLA course documentation I have states quite clearly that a guarantor must be given a cooling off period.

A letter accompanying the deed should state their right to this and refer to the DSR 2000and the tenancy should not commence for at least 7 days from the date of the letter.

G should also be sent a copy of the tenancy agreement at the same time as the deed so they know what they are agreeing to.

Failure to mention a 7 day cooling off period means a 3 month cooling off period automatically applies.

I appreciate that people may say ARLA may be incorrect but I thought useful to share their guidance on it.

Lawcruncher
16-07-2011, 20:23 PM
ARLA may be right. Perhaps they consider it better not to take any chances.

If following their advice you would though have to make the tenancy agreement conditional on the guarantor not cancelling.

mind the gap
16-07-2011, 20:33 PM
ARLA may be right. Perhaps they consider it better not to take any chances.

If following their advice you would though have to make the tenancy agreement conditional on the guarantor not cancelling.

It is hardly a 'moment-of-madness purchase', though is it?

Plus, the fact that the G is supposed to have adequate time to read the contracts and seek legal advice if need be would seem to eliminate the need for a formal 'cooling-off' period in any case, would it not?

Lawcruncher
16-07-2011, 21:02 PM
I have only skimmed the Regulations, but it seems to me that the thrust of them is that the "deal" has to come about as a result of distance selling for them to apply.

I have posted a question on various forums:

http://www.swarb.co.uk/phpbb/viewtopic.php?f=12&t=10848

http://www.consumeractiongroup.co.uk/forum/showthread.php?313292-Guarantees-and-Distance-Selling-Regulations&p=3491325#post3491325

http://www.housepricecrash.co.uk/forum/index.php?showtopic=166697

mind the gap
16-07-2011, 21:32 PM
But the G is not being sold anything.

Lawcruncher
16-07-2011, 22:33 PM
But the G is not being sold anything.

True, but there could be an argument that the guarantee is part of the whole package.

mind the gap
16-07-2011, 23:01 PM
True, but there could be an argument that the guarantee is part of the whole package.

If that is the case then it is surely the LL and not the G who needs a cooling-off period!