Government’s so-called protection is damaging decent tenants’ prospects

Reply to the comment left by James Fraser at 08/03/2021 - 21:03
Hi James and thanks for your reply.

No i couldn't believe what i was reading either hence the reason I called them to check the implications I could clearly see sere against our interests to check sthey were correct and they did indeed confirmm my interpretation and implications of them.

They didn't quote me a specific case law, just putting forward 'recent case law would make your [my original deed of guarantee] completely invalid.

Under the heading of 'Guarantors' on the tenancy,

clause 10.1 reads"If there is a guarantor for this agreement you must tell us as soon as you become aware that any guarantor has died, become bankrupt or cancels the guarantee. For the avoidance of doubt a guarantor is someone other than a tenant who has agreed to guarantee your financial obligations (including but not limited to, the rent and and any losses we incur as a result of you breaching this agreement) under this agreement.

10.2 If it is reasonable for us to do so, within 2 months of us learning about this we can give you notice in writing to find a new guarantor within 28 days. We must be satisfied with your choice of guarantor. We will give you reasons as to why we need a guarantor. That guarantor must then, within 28 days, sign a new guarantee including the same terms as the previous guarantee. This guarantee will then apply from the date the previous guarantee came to an end."

As previously said the NRLA telephone advisor confirmed that their tenancy and guarantor agreements wont hold a guarantor liable beyond the fixed term at which point they can walk.

The clauses are very 'twee' but as you know- what are you going to enforce them if a guarantor walks and the tenant doesn't place a new guarantor?

Its 'no guarantor city time' is the confirmation I received from the advice line!! That last bit is my paraphrase of course!!

Reply to the comment left by Chris @ Possession Friend at 09/03/2021 - 09:15
Go back to the Advice line and ask for the specific case ( always ask for the case details, don't just accept, 'there was a case' )

Hi James and thanks for your reply.

No i couldn't believe what i was reading either, hence the reason I called them to check the implications I could clearly see could be against our interests, to check they were correct and they did indeed confirm my interpretation and implications of them on the telephone.

They didn't quote me a specific case in law, just putting forward 'recent case law would make your [my original deed of guarantee] completely invalid in its entirety in holding a guarantor 'forever liable to the end of a tenancy beyond the fixed term'. Furthermore I was told it would be most likely seen as an 'unfair condition' by a judge and the entire deed set aside.

Under the heading of 'Guarantors' on the NRLA tenancy,

clause 10.1 reads"If there is a guarantor for this agreement you must tell us as soon as you become aware that any guarantor has died, become bankrupt or cancels the guarantee. For the avoidance of doubt a guarantor is someone other than a tenant who has agreed to guarantee your financial obligations (including but not limited to, the rent and and any losses we incur as a result of you breaching this agreement) under this agreement.

10.2 If it is reasonable for us to do so, within 2 months of us learning about this we can give you notice in writing to find a new guarantor within 28 days. We must be satisfied with your choice of guarantor. We will give you reasons as to why we need a guarantor. That guarantor must then, within 28 days, sign a new guarantee including the same terms as the previous guarantee. This guarantee will then apply from the date the previous guarantee came to an end."

As previously said the NRLA telephone advisor confirmed that under recent case law a guarantor can walk after the fixed term at will and is unlikely to be held liable after a fixed term.

If the tenant doesn't replace the guarantor then its 'no guarantor city time' is the confirmation I received from the advice line!! That last bit is my paraphrase of course!!

By the way although I have always used nla agreements since the 'noughties' I never used any guarantor forms of theirs (if they indeed existed), I had my own deeds and warning letters from elsewhere.

Since having put up my original post and having read the said clauses causing me to immediately grab the phone and receiving the response you have read, I have since looked further into the NRLAs guarantor stuff.

The information I was given on the telephone advice line was as said (and no I'm not thick so I checked this information from at least 4 different angles and scenarios (much to their disdain!!- very often they want to move on rather than spending time repeating things in different ways!) to ensure the operatives advice was consistent and correct.

I have since found the written guarantor forms conflict with the telephone advice given.

So is it a case of a wrongly informed advisor that was mybe having a bad day? Or are the NRLA aware of a situation where we are not as secure under guarantees as the advisor has said but they're not letting on in writing yet?

Answers on a postcard please from any legal bods out there that are familiar with any 'recent case law'!!

As for the current situation, with time being of the essence I'm going with the NRLA stuff and keeping my fingers crossed but further investigation for the future will follow-this could undermine my long standing security strategy and I've got enough on with the government undermining me at every turn!!

Reply to the comment left by Chris @ Possession Friend at 09/03/2021 - 09:17
Thank you Chris that sounds good advice. Sorry if the my last message overlapped with yours.

Reply to the comment left by Paul landlord at 09/03/2021 - 10:20
So the NRLA have changed their AST, on the basis of a recent case that makes it " UNLIKELY ! a guarantor could be held liable after the end of the fixed term "
If such a case had caused this change in their AST, you would have expected them to have published it in their magazines, including the case.

Personally I think its bad drafting of the AST. There are examples of bad drafting in regard to the rent increase clause, which says rent can ( only ) be increased ON, the anniversary of the tenancy [ in other words, miss the increase by a day and have to wait 364 days to next years anniversary ! ]

Reply to the comment left by TheBiggerPicture at 08/03/2021 - 12:11
And that is why it remains empty. So that I retain control. And when I can sell it I will.

This thread amply illustrates why I have never used draft documents provided by well meaning organisations but drafted by non-landlords. The concept of limiting a rent review to one day in a year is an obvious trap. I have had an agency pinch my draft which I suppose is a form of flattery.

Reply to the comment left by James Fraser at 08/03/2021 - 21:03James
Only just picked up this thread. Until October 2020 the NRLA guarantee did indeed allow the guarantor to walk away after the fixed term expired. See my article here: https://www.property118.com/satisfaction-not-guaranteed/
The good news is that I emailed NRLA last August and they changed their document. They wrote to me:
"The old NRLA guarantor forms were based on previous legal advice to both the NLA and RLA stating that a cancellation clause was necessary to ensure landlords could enforce the guarantee. After receiving your email we had chance to revisit this and we were pleased to have it confirmed that a cancellation clause was not required. As a result we had the document redrafted and improved, removing the cancellation option for the guarantor. These new versions have now been approved and are up on the website."

Reply to the comment left by Robert at 14/03/2021 - 23:52
Bit of a nerve, but can you please share your draft?

I would like to correspond with Dr Beck, would she kindly send me an email address to grahame@genevapropertiesltd.com Concerned landlord