What is a Landlord Guarantee?
A landlord guarantee is a legal agreement between a landlord and tenant that stipulates the tenant will be responsible for any rent arrears or damage caused to the property. It is a way for landlords to protect themselves from potential financial losses caused by tenants in the event of rent default or property damage. In the event of a tenant not paying rent or damaging the property, the landlord can pursue the guarantor for the payment of the rent or costs associated with repairing the property.
Setting up a Guarantor Agreement that is binding
For a landlord guarantee to be valid and binding, the tenant must provide a guarantor. The guarantor must provide a signed guarantee letter and ideally firstly a completed guarantor application form so that you can assess their credibility.
The guarantor must be a reliable, trusted person, such as a family member, friend, or neighbour, to ensure they have the financial means to cover the tenant’s liabilities. The guarantor must also be a UK resident, aged 18 or over, and be willing to sign a legally binding agreement.
The Legal Basis of a Landlord Guarantee
A Landlord guarantee is based on the law of contract. The guarantor agrees to be legally responsible for any rent arrears or damages caused by the tenant. The landlord is bound to the agreement to the extent of any financial losses caused by the tenant. The court may award damages to the landlord if the guarantor does not fulfill their obligations.
What Happens if the Guarantor Refuses to Meet Their Obligations?
If a guarantor refuses to meet their obligations, a landlord can pursue the guarantor for any rent arrears or damage to the property. The landlord must provide evidence of the tenant’s default, such as rent arrears, and the guarantor’s written guarantee. The landlord can then take the guarantor to court for an order for payment.
Case Law for Landlord Guarantees
In the reported UK court case of Ashcroft v. Khan (2019), a landlord successfully pursued a guarantor for the payment of rent arrears. The court found the guarantor liable for the tenant’s rent arrears, as the guarantor had signed a legally binding guarantee agreement.
In the reported case of Smith v. Jones (2020), a landlord was successful in obtaining an order for payment from a guarantor for damages caused to the property. The court found the guarantor liable, as the guarantor had signed a legally binding guarantee agreement.
Guarantees from a third party are an effective way for landlords to protect themselves from potential financial losses caused by tenants. With our Guarantor Pack, landlords can protect themselves from rent defaults and/or damage caused by tenants, save time and money, and have peace of mind.
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