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Renewal Assured Shorthold Tenancy - Guarantor still liable for arrears, even though I didn't sign?

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Guest Martin-OT

Hi All

 

I am in a bit of a tricky situation and wondered if any of you could help me with a question -

 

In DEC 2007 I signed as guarantor for a friend for a 6 month 'ASSURED SHORTHOLD TENANCY'. There was no arrears so it was all fine,

 

In JUNE 2008 the tennant signed a renewal for 1 year, it was called a 'RENEWAL ASSURED SHORTHOLD TENANCY AGREEMENT',

 

He has now fallen into arrears because he is self employed and his business in now failing (given the current climate). The rent was not paid on 21 DEC 2008, and I have been called to make payment:-x,

 

I did not sign for a further period in JUNE 2008, so assumed my liability ended then. I wasn't aware of this renewal until it had been signed, no letter, no phone call, Etc. from the letting agency to inform me of my continued liability. Rightly so, the tennant, didn't feel the need to contact me as there was no mention of my name in this new lease,

 

The tennant has told me he needs to leave on 21 JANUARY 2008, as he cannot afford the rent and is now facing bankruptcy. He has an £800 deposit with the letting agency so this *could* cover the arrears of £700 - I know it dosn't exactly work like this however,

 

I am then in the situation of where I could potentially be liable for 5 months rent if no tennant is found.

 

I believe that the letting agency have acted irresponsibly/unfairly in not informing me of my continued liability.

 

Could you tell me if they are within their right to ask me for payment? Are there any clauses Etc. I could look for in the renewal lease that *should* tell me of my continued liability?

 

I have both leases infront of me, so I can respond back quickly with any additional details you need to know,

 

Cheers guys

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I've included a couple of links that might help.

 

http://www.accentproperty.com/pdf/Blank%20Guarantor%20Agreement.pdf

 

this first link is a draft Guarantor Agreement which states :

This Guarantor Agreement refers to the current tenancy being undertaken and any extension or renewal of that tenancy. All references to the Landlord herein shall be deemed to include the Landlord's Agent or any person authorised to act on the Landlord's behalf.

 

Guarantors - TenantVERIFY

This second link says :

Landlords should also bear in mind that any variation in the agreement, including the fixed-term coming to an end and tenancy renewal, if done without the guarantor's consent, will discharge the guarantor's liability.

The guarantor may need to sign a new guarantor agreement on tenancy renewal if you want their obligations to continue.

 

 

So it really depends on the wording of the tenancy and Guarantor Agreements.

 


Please note: I have no qualifications in this area and any advice offered is given in good faith.

 

 

http://www.financial-ombudsman.org.uk/publications/Ombudsman-news/40/40_setoff.htm

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Guest Martin-OT

Hi, thank you for the above reply ^

 

There is a clause 5, at the end of the original lease (an attachment),

 

It says,

 

"The Guarantor's obligations under this deed are not restricted to the fixed term created by the agreement and remain fully effective during any continuation of the term"

 

Could you provide any more insight to that?

 

As I say, on renewal I wasn't even informed it was being renewed, surely that isn't right? What if the tennant had signed 5 year lease?!

 

Cheers,

Martin

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I'm afraid it looks as if you may be liable for at least December & January's payments and any further payments up to and including June or when they re-let the property whichever is the earlier.

 

Ref the Clause 5, you state this is an attachment. Presumably this was there when your friend signed the original lease and you signed the guarantee, i.e. not added on later?

 

Sorry I can't be of more help, but someone with more knowledge about tenancy/guarantor matters should be along later.

 

enamae.


Please note: I have no qualifications in this area and any advice offered is given in good faith.

 

 

http://www.financial-ombudsman.org.uk/publications/Ombudsman-news/40/40_setoff.htm

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Guest Martin-OT

Hi, thanks again for the reply ^,

 

I signed it as an attachment of the original 6 month lease, but not the new 12 month lease (my name isn't mentioned in the new lease anywhere, or a guarantor for that matter), the lease was made between the landlord and tennant,

 

Just find it all a bit out of order, that they do not make you aware of your continued liability if the tennant renews, just for simple reasons - if we had fallen out of touch Etc.

 

I would appeciate any more feedback because it seems like I will be spending a bit of time on the phone on Monday!

 

Cheers,

Martin

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Guest Martin-OT

Hi, I don't suppose anyone can offer any more information on this for me?

 

Cheers,

Martin

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Martin,

 

If you signed up to this:

 

"The Guarantor's obligations under this deed are not restricted to the fixed term created by the agreement and remain fully effective during any continuation of the term"

 

then I would say that you could have been liable if the tenancy had continued as a Statutory Periodic, but that you can reasonably argue that issuing of a new contract resolved you of your obligation.

 

At the very least, a statutory periodic tenancy can be terminated at one month's notice which reduces your obligation, whereas by signing a 12 month contract they have attempted to tie you into an obligation that is twice as long as you originally agreed to.

 

A regular poster here (Aequitas) argues that since you yourself are not a beneficiary of the contract, that you have received no "consideration". Without consideration there can be no contract (basic law of contracts). Aequitas essentially argues that it is extremely hard to draw up an enforceable guarantee agreement.

 

In your position I would simply write:

 

"I did not agree to be a guarantor for the new 12 month contract, and therefore dispute my liability. If you do not agree, please send copies of the relevant contracts signed by me that you believe make me liable."

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PS enamae's link reminds me that Aequitas (IIRC) agreed with the following:

 

"they must also sign a Deed of Guarantee (Guarantor Agreement). This deed should be witnessed". Did what you sign say it was a Deed?

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Good one Steve M x


Please note, my advice is only my opinion.

If you have found my advice helpful, please tip my scales, thank you

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help required renewal assured shorthold tenancy guarantors

 

having just lost my case against the guarantor at great personal expense

 

my agency didn't get the guarantor to sign the new agreement and even those agency solcitors told me i was cover by section 27, section 19 , section 1 extentions this was not the verdict of the judge.

The judge deem the contracted as a new tenancy agreement so you have nothing to worry about.:shock:

 

only other thing he took in to consideration was you aware of this tenancy agreement and my tenant simply said done its on her own :-o

 

finally if you are a landlord don't expect anything from your agency they just say you didn't ask for it. even the ombudsman found in the agency favour which took me by surprise

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Hi, Martin-OT.

 

I wandered what the outcome of this as I am in the same situation. My Guarantee Agreement for residential tenenacies

 

Was signed by me and the letting agent (not the landlord) but was not witnessed even though it said 'signed as a deed'

 

Also I signed the document in 2007 but it now has been dated 2010 so I can only assume it was originally signed without a date.

 

Any help would be appreciated

 

Thanks

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