Guarantors – Unfair Terms in Consumer Contracts Regulations 1991

Having a guantor who earns 75% less than the tenant is not a good place to start. I would not accept a guantor unless they could demonstrate an ability to cover their commitment; it doesn't sound as though your agent has been very bright.

Reply to the comment left by "money manager" at "09/05/2015 - 18:56":

No you are right it was a stupid place to start. Essentially I have a kid guaranteeing a kid. However she does have a job and her parents are naturally very concerned and worried about all this as the mother sounds like a decent person and doesn't want her daughter to get a CCJ etc. The tenant has very nicely told the guarantor that he will reimburse her for any money she has to pay to us under the guarantor but her mum is really upset that he will let her go through the stress of the whole court process first. The tenant is scum and I haven't gone after him partly because we don't know where he is and also he doesn't give a hoot, he's just playing the system. The guarantor is bothered about all this and we stand more chance getting something from her even if it is a nominal amount for several years! My guess is her parents may bail her out but I'll have to wait and see, it depends whether the court sides with her or us.

If the tenant will reimburse her, why won't he pay you? I think going after a 20 year old may well not get you the sympathy of the court, also can she pay? Why should her parents pay? Personally I think you should go for the tenant and the agent first. The guarantor seems to be in contact with him so you be able to trace him.

Reply to the comment left by "Puzzler " at "10/05/2015 - 13:07":

The tenant is not much older himself and is cocky. He clearly believes we won't win so no doubt this is why he's making the gesture. She's got a job so clearly can pay something. Out of the two of them we are more likely to get her to pay up

Interested to hear how you get on

Again, if it were me, I would let the judge know that you believe that the tenant has indemnified the guarantor against her losses. Although not strictly relevant, it will make the judge aware of the mechanics of what's happening. Be prepared to answer why you aren't going after the tenant, though.

Reply to the comment left by "Romain Garcin" at "08/05/2015 - 18:30":

@ Romain Garcin "My point is that the UTCCR 1999 specifically applies to contracts, and that a guarantee is usually not a contract (whether or not it is executed as a deed)."

@ John Frith "If it was me, I would, at trial, point out that the UTCCR 1999 specifically applies to contracts, and that a guarantee is usually not a contract (whether or not it is executed as a deed). That should nullify the main thrust of their defence."

Sorry guys but you are starting an urban myth. A GUARANTEE IS A TYPE OF CONTRACT. If it were not it could not be enforced as the guarantor would not be contractually bound. The point about execution as a deed is a bit of a red herring. Some contracts are signed under hand, some are executed as deeds. Contracts executed as deeds do not need consideration (i.e. no detriment has to pass from the promisee).

If you want some authority other than my say-so, please refer to one of the leading textbooks: Woodfall on Landlord and Tenant Volume 1 at 5.153: quoting Lord Justice May in the Court of Appeal: "Where the underlying contract between creditor and principal debtor and the contract of guarantee (sic) are still subsisting...." and at 5.154.1: "In the absence of special provisions in the contract of guarantee, a guarantee is generally released by a variation of the lease to which he has not consented."

Reply to the comment left by "Ian Narbeth" at "11/05/2015 - 09:08":

Thanks for clarifying, Ian.

Now, on to my second point: The contract's subject matter, and the price of the service are excluded from UTCCR 1999. For a guarantee I would think that the guarantee itself is the subject matter.

I thought that the established position was, in any case, that the guarantee was released when the terms of the tenancy changed or the tenancy was replaced.
Now, your quote suggests that variations of the terms (e.g. rent) do not necessarily release the guarantee:
5.154.1: “In the absence of special provisions in the contract of guarantee, a guarantee is generally released by a variation of the lease to which he has not consented.”

"you are starting an urban myth": In the lettings industry this is called "received wisdom" 😉

Since the discussion is on Guarantors can someone please advise if the guarantors live overseas would this still count covering a UK tenancy? also at the end of a fixed term does a new guarantor document need to be signed?

Reply to the comment left by "Dinah " at "19/05/2015 - 14:20":

Hi Dinah
Yes if a guarantor lives overseas they are still bound. The landlord may have problems serving proceedings on the guarantor out of the jurisdiction and then enforcing any judgment against them. If a new tenancy is signed then a new guarantee must also be completed.