View Full Version : Six tenants; one defaulted on rent
knottycrocodile
11-02-2008, 14:33 PM
My friend, together with 5 others, signed a one year tenancy agreement for a house at the rate of £2210 per month. All are students and all had guarantors. All set up their own Standing Orders. However, one of the students failed to pay her rent and eventually moved out of the flat. None of the others knew the rent had not been paid until the landlord contacted them 6 months down the line.
What is the position? Is the guarantor of the student who left the flat responsible for her portion of the rent for the whole year of the agreement? Should legal action be taken against her or her guarantor and who should take it, the tenants or the landlord?
The landlord should go after the tenant first for not complying with the tenancy, If then the rent is not paid, the landlord can go after the guarantor. However, if all fails as the tenancy was a joint and several tenancy, the remaining tenants are responsible for the contractual rent for the term.
I note that the rent exceeds £25k per annum and therefore the tenancy should not be an Assured/Assured Shorthold (Housing Act does not apply).
The tenancy must be a common law tenancy
knottycrocodile
11-02-2008, 15:03 PM
Can you explain the difference between an Assured Shorthold Tenancy and a Commonlaw Tenancy? They signed an Assured Shorthold one.
Colincbayley
11-02-2008, 15:14 PM
Can you explain the difference between an Assured Shorthold Tenancy and a Commonlaw Tenancy? They signed an Assured Shorthold one.
The only main difference between an AT and AST is the LL's right to use a S.21 notice to evict the tenants under an AST.
If the LL has issued an AST and the rent exceeds £25K pa, then this agreement is not valid.
jeffrey
11-02-2008, 15:16 PM
Can you explain the difference between an Assured Shorthold Tenancy and a Commonlaw Tenancy? They signed an Assured Shorthold one.
The first paragraph of Colin's reply deals with AST and Standard Assured Tenancy, which is not what you asked.
A common-law tenancy is entirely outside statutory provisions such as the Rent Act 1977 and the Housing Act 1988. For instance, some post-1988 lettings are excluded from 1988 Act: see its Schedule 1. A letting at >£25 000 per year (which he mentioned) is one example.
knottycrocodile
11-02-2008, 15:27 PM
So can you tell me the tenants position then if they signed an Assured Shorthold Tenancy Agreement? Does it mean that the Agreement is not valid? And what is the position regarding the non-payment of rent by one of the tenants? I would think that it is the Landlord's duty to go after the tenant or her guarantor isn't it? After all, if one tenant is allowed to get away without paying the rent surely they can all do the same (although they won't) And if the Landlord took them to Court surely the only tenant to be liable would be the one who had not paid? Grateful for any comments and advice please?
jeffrey
11-02-2008, 15:42 PM
If letting is legally incapable of being AST, it can't be one no matter what Agreement says! Please explain circumstances which led to query.
knottycrocodile
11-02-2008, 15:57 PM
My original query was: a friend together with 5 other students signed an Assured Shorthold Tenancy Agreement for a one year term paying £2210 per month. One of the students failed to pay her rent and the landlord advised the other tenants of this 6 months down the line. All the tenants have their own guarantors. I was asking, what is the position? Should the landlord pursue the tenant or their guarantor for their rent for the one year period?
jeffrey
11-02-2008, 16:07 PM
Yes, I saw your original post. I was puzzled by your later query re common-law tenancies!
Was there a single AST for them all or six individual ones? It is impossible to hold any legal interest in more than four names, so people 5/6 therefore could not be Assured Shorthold Tenants! The normal rule, that joint tenants are jointly and severally liable for entire rent, could not bind people 5/6, for instance.
knottycrocodile
11-02-2008, 17:41 PM
Yes, I saw your original post. I was puzzled by your later query re common-law tenancies!
Was there a single AST for them all or six individual ones? It is impossible to hold any legal interest in more than four names, so people 5/6 therefore could not be Assured Shorthold Tenants! The normal rule, that joint tenants are jointly and severally liable for entire rent, could not bind people 5/6, for instance.
Do you know what their position is then if the Agreement is illegal?
What happens regarding the defaulting tenant's rent arrears?
Any advice as to how they should approach their landlord?
jeffrey
11-02-2008, 21:33 PM
Is it illegal? How? All I said was that it's not effective legally.
There can be only four joint tenants. People 5/6 aren't tenants so aren't bound by tenancy obligations either.
Rodent1
11-02-2008, 22:53 PM
Is it illegal? How? All I said was that it's not effective legally.
There can be only four joint tenants. People 5/6 aren't tenants so aren't bound by tenancy obligations either.
Jeffrey,
You worrying me ....I've got up to 8 people on a joint AST (students in an HMO ) and several 5's and 6's ...so have a lot of LL i know ....and a lot of LA's .....
So
1. What are we supposed to be using to be legally effective?
2. Are we all now powerless to enforce AST terms as is?
S
jeffrey
12-02-2008, 08:49 AM
Again: English law does NOT permit any legal estate or interest in land to be held by >4 people (except re charities/certain public trusts and life settlements). This is clearly stated in s.34(2) of Trustee Act 1925. Send e-mail [not pm] to me if you want a more detailed explanation.
The attempt to grant to >4 people vests the interest in only the first four of them: s.34(2)(a). At best, people 5 et al could be licensees. I usually recommend a supplemental Agreement whereby L imposes on them obligations (e.g. pay rent) identical to those which bind people 1-4.
nellster100
12-02-2008, 12:17 PM
Just for absolute clarity then - if the rent is more than £25,000 the deposit does NOT have to be protected and the agent can hold (and earn interest on!?)
jeffrey
12-02-2008, 12:20 PM
Yes and no!
Yes- a letting at >£25 000 per year cannot be an AST. Deposit protection therefore does not apply.
No- any interest earned on deposit belongs to either L or T (depending what AST states) but NOT to Agent.
Yes and no!
Yes- a letting at >£25 000 per year cannot be an AST. Deposit protection therefore does not apply.
No- any interest earned on deposit belongs to either L or T (depending what AST states) but NOT to Agent.
Its usually in agents terms and conditions that if they hold the deposit they keep the interest?
Regarding the 'AST' being valid.
There is a tenancy in place, and the 4 tenants (whoever they are) will be jointly and severally liable.
Much of what is in the agreement will be binding (ie amount of rent due, the fixed term, what each party has promised to do)
Everyone 'walking away' from the tenancy is not an option just because the agreement says it is an AST.
If the LL claims from the 4 tenants for the missing rent, they can claim from the person that left to get their money back.
Regarding guarantors; depends what sort of agreement was made with LL as to individual liability.
As a Letting agent. The answer to the question is the tenants are the ones liable for the rent.
The guarantors are third party. However common courtesy, means one normally goes to the guarantor of the defaulting tenant first, before pursuing the outstanding rent from the students.
BUT THE LANDLORD DOES NOT HAVE TO GO TO THE GUARANTOR. FIRST.
The other tenants do have a right to know about the defaulting tenant right from the begining. Despite in most cases the defaulting tenant not liking it.
regarding the amount of people on an agreement, i would have to disagree with Jeffrey, lots of student agreements have more than 4 people on the them.
So on the basis of who is liable, for rent arrears, if they are 5 or number 6 and they are the defaulting members!!
Who do you choose?
Would be interested in the precedent on this comment, and the courts opinion.
jeffrey
16-03-2008, 12:37 PM
regarding the amount of people on an agreement, i would have to disagree with Jeffrey, lots of student agreements have more than 4 people on the them.
So on the basis of who is liable, for rent arrears, if they are 5 or number 6 and they are the defaulting members!!
Who do you choose?
Would be interested in the precedent on this comment, and the courts opinion.
I guess that you don't agree with the Trustee Act 1925 either, then. What can I do to disabuse you of your misunderstandings?
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