Here is a question to the blog clinic from Tanya (not her real name), who is a tenant.
I agreed to be a guarantor for a family member and signed a fixed term contract for 12 months, 6 months, and then a further 12 months. The final fixed term ended in July 22 and I had decided I was not going to sign any further contracts to stand as guarantor.
I then found out from the tenant that the landlord had changed the tenancy to a periodic one as she was considering selling the property. The rent was also increased at the same time.
I emailed the landlord to say I wasn’t willing to carry on being guarantor during a periodic tenancy that could continue for months on end and as they had also increased the rent I understood that this was a variation in the contract and released me as guarantor.
The Landlord responded to say I was still guarantor and they had informed me at the beginning of the tenancy I would still be liable as guarantor if the tenancy converted to a periodic one which is an absolute lie.
I have read through all the contracts I signed, and there is nothing to state my liability extends beyond the term I signed for. Will I still be liable as guarantor if the tenant does not pay his rent or due to the variation in the contract, is it now null and void?
Answer
My view is that you will not be liable under this guarantee. The main reason for this is that the rent increased.
You signed up to guarantee a tenancy at £X. You did not sign up to guarantee a tenancy at £Y.
So the guarantee you signed is effectively ended with the increase in the rent. For the guarantee to continue at the new rent, you would need to sign a new guarantee form.
It is a moot point whether the guarantee will extend beyond the fixed term of a tenancy, and it will depend on the wording of the guarantee.
Our Landlord Law guarantees provide for this, but we also provide for the guarantor to be able to end a periodic guarantee on two months’ notice. Which makes it fair.
Contract terms are required to be ‘fair’ under the Consumer Rights Act 2015. I do not think it would be considered fair for you to be held liable under a contract that can roll on indefinitely and which you cannot end. Particularly if the document gave an end date and did not warn you that it could continue beyond that date.
If there is nothing in the guarantee about subsequent periodic tenancies, then my view is that it will not continue. Even if you disregard the unfair terms rules, the situation will be ambiguous at best and ambiguous contacts are generally interpreted against the party that provided the contract under a rule known as the Contra Proferentem Rule.
It is not up to the landlord to decide whether a guarantee is valid or not – that is the job of a judge if the case goes to court. So if this landlord makes any claim against you I suggest that you tell him that you have had advice that the guarantee is no longer valid against you and that if he does not agree he can take you to court about it.
Go on to say that if he does take you to court and you win, you reserve the right to show your letter to the Judge and ask that he pay all your legal costs.
A friend has asked to be a guarantor for her daughter at university in a shared house (single tenancy agreement between all), so I suspect my friend may end up as a guarantor for all if the other parents fail to pay but the contract also states my friend will remain guarantor for as long as her daughter stays in the house even if my friend is declared bankrupt or dies.
But in this case, if the guarantor ceases being guarantor, can the landlord evict the tenant as there is no longer a guarantor ?
That’s not a ground for possession. Unless I suppose it was a term of the tenancy agreement when ground 12 could be used. But it would depend on the Judge finding that it was reasonable to evict as it is a discretionary ground.
“we also provide for the guarantor to be able to end a periodic guarantee on two months’ notice. Which makes it fair.”
Doesn’t that effectively mean the guarantor’s liability is capped at just two months’ rent?
After the fixed term has ended, yes. The guarantees do not permit ending the guarantee during the fixed term.
“After the fixed term has ended, yes.”
That’s very fair -for the guarantor/tenant.
I doubt many landlords would think so.