LANDLORD NEEDS ADVICE re Guarantor

[Gallahad]

I am after some advice with regard to a flat I rent out.

 

I had a tenant in the property who was unable to pass the necessary credit checks, therefore a guarantor agreement was also set up with a friend of her family.

 

This was all handled through my letting agent.

 

The tenant lived at the property for 18 months before giving the statutory one months notice.

 

When she moved out she left the property in such a state the cost of putting it back to it's original condition was over £1000.

 

The tenant refuses to pay for any of it and after much toing and froing I had no choice but to make contact with the guarantor.

 

The letting agent told me at the time I should charge for lost rents whist waiting for the money because the flat was in such a state they are unable to market it because it was so bad.

 

I wrote to the guarantor claiming for the costs of repair and also the lost rent since she had vacated.

 

He has written back to say he has taken legal advice and he is not liable for the loss of rent.

 

In the meantime my letting agent has gone out of business!!!

 

I am trying to understand the wording of the tenancy agreement and also the guarantee and these are the relevant paragraphs I think....

 

Tenancy

 

"you must

 

keep the inside of the property in at least as good a condition as it was when the tenancy started (fair wear and tear excepted)."

 

and

 

"at the end of the tenancy, leave the property and our fixtures and fittings in as good a condition as at the start of the tenancy (fair wear and tear excepted) and free from rubbish."

 

Guarantee

 

"INDEMNITY FOR DEFAULT

 

If the tenant defaults in the performance or observance of any of the covenants or other obligations on his part contained in the Tenancy Agreement the Guarantor will indemnify the landlord forthwith upon receipt of the Landlord's written demand in respect of all losses damages expenses and costs incurred by the Landlord as a result of such default"

 

 

As I say, I think these are the relevant parts of both agreements but I wondered if anyone with further knowledge could comment.

 

G

[Steve__M]

There is an argument that a guarantee needs to be executed as a deed (it must say it is a deed and the signatures must be witnessed by an independent party) otherwise it is worthless. The reason is that because the guarantor gains no benefit ("consideration") from the deal no contract can be formed.

 

It's highly possible that the guarantor has not taken legal advice at all and is merely negotiating to mitigate the cost. You might be better off negotiating in return rather than going to court.

 

PS. the problem with agents is that they really have little interest in keeping problematic tenants in line. It is much better to be firm with tenants during the tenancy, which normally means personal visits to inspect the property.

[Gallahad]

Thanks for your observations Steve

The guarantee is in the form of a deed and witnessed so we can meet that criteria. We thought , like you, he may be attempting a negotiation but in view of the offer

he has made is only covering the costs of repair we are inclined to pay the £70 cost to bring it to court under small claims and let the Judge decide on the issue of lost rents.

G

[Steve__M]

That's good. There is still time to negotiate though.

 

By most accounts, court is long-winded and risky, and you are unlikely to get all you ask for. I assume you would need to jointly sue tenant and guarantor though I'm not a lawyer.

[raydetinu]

I pressume you have kept the deposit towards the defects and told the TDS scheme holder so you got the deposit.

has the tennant lodged a dispute? or just accepted the loss of deposit.

[Gallahad]

Yes we would have to jointly sue but we have already established the tenant owes all the utility companies ans well as council tax

and many other creditors so there would be no chance of getting any payment from them.

G

[Gallahad]

I pressume you have kept the deposit towards the defects and told the TDS scheme holder so you got the deposit.

has the tennant lodged a dispute? or just accepted the loss of deposit.

 

The tenant was on benefits and the security was via a council bond which pays a maximum of £750. They disputed our claim with the council and lost. The council then paid the bond to us (so you imagine the extent of the damage) the council also told us we would be entitled to sue the tenant for the balance of the repair work which amounts to another £700 plus the loss of rents.

G

[Ed999]

As landlord, you have a legal obligation to mitigate your loss. You must promptly put the property back into repair at your cost, to minimise any loss of rent, and promptly re-let it. You bear the cost of any delay, not the tenant.

 

You can be compensated by the court for the reasonable cost of the repairs, together with interest up until judgement is given. But you cannot succeed in a claim for loss of rent for more than the very brief time it should have taken to redecorate the property.

 

Sue both the tenant and the guarantor: you will normally need to establish liability against the tenant in order to give rise to any liability on the part of the guarantor.

 

A guarantee of this type is normally invalid unless given in a deed, i.e. under seal and witnessed, because only a contract by deed is exempt from the legal requirement for all parties to the contract to provide monetary or other consideration. The guarantor will not usually have given consideration, so only a guarantee by deed will be binding on him.

Edited April 17, 2011 by Ed999

[Gallahad]

As landlord, you have a legal obligation to mitigate your loss. You must promptly put the property back into repair at your cost, to minimise any loss of rent, and promptly re-let it. You bear the cost of any delay, not the tenant.

 

You can be compensated by the court for the reasonable cost of the repairs, together with interest up until judgement is given. But you cannot succeed in a claim for loss of rent for more than the very brief time it should have taken to redecorate the property.

 

Sue both the tenant and the guarantor: you will normally need to establish liability against the tenant in order to give rise to any liability on the part of the guarantor.

 

A guarantee of this type is normally invalid unless given in a deed, i.e. under seal and witnessed, because only a contract by deed is exempt from the legal requirement for all parties to the contract to provide monetary or other consideration. The guarantor will not usually have given consideration, so only a guarantee by deed will be binding on him.

 

Hi Ed, thanks for the heads up on that.

G