The guarantor could the Landlord’s backup insurance policy
Guarantors stand surety or in other words guarantee rent payments and other tenancy obligations. Anyone over the age of 18 who is willing to vouch for the tenant can be a guarantor. The guarantor signature MUST always be witnessed.
The guarantor is the Landlord’s insurance policy against Tenant default. They pay the Landlord the rent if the Tenant defaults, and pay the Landlord their losses, expenses or damages where the Tenant fails to carry out his obligations under the agreement. Which must have been witnessed to be a valid document [deed]
With residential tenancies, it is common for the Landlord or Agent to ask for a guarantor, particularly when a Tenant has a low credit score or considered a risk category such as students or benefit claimants. The harsh reality is the current economic climate means every Tenant is a risk.
Where a guarantor enters into an agreement they normally agree to meet the full obligations under the Tenancy Agreement on the Tenant’s behalf.
This may include rent arrears, damage to the property, or other liabilities and obligations arising from the Tenant’s failure to comply with the lease covenants. The guarantor is contractually bound to accept these legal liabilities of the Tenant and will be sued if they don’t comply.
As with most types of legal action, claims against guarantors have been on the increase in recent years, so the role of the guarantor is quite an onerous one and not to be entered lightly.
Usually need to be a homeowner
The guarantor would usually need to be a homeowner with steady long-term employment if they are to satisfy the requirements of a good credit score, to become a guarantor.
Parents of young people or students are often asked to guarantee their children’s rent. This, hopefully, is less risky for the parent, as they know that their child can be trusted.
However, parents need to be cautious here because joint residential tenancies for students or groups usually carry a joint and several liability – this means that the parent is, in effect, guaranteeing all the other residents as well and not just their child!
The guarantor’s application form is like the tenancy application. Credit searches and references will be checked and all the following:
- The individual’s identity
- The property to be let
- Guarantor’s personal details
- Residency information
- Legal history and any CCJ’s
- Employment history
- Accountants, solicitors, character referee
- Bank and trade references for businesses
- Declaration allowing credit search & signature
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