Who needs a guarantor agreement?Make Text Bigger
Legal opinion appears to be that it is difficult to create a guarantor’s agreement that can be enforced. Apparent problems include:
• It must be executed as a Deed.
• LL must advise Guarantor to take legal advice before signing.
• Deed probably needs to be signed after the tenancy has started.
• (and therefore) having an enforceable agreement that applies to replacement tenancies (including ASTs) is difficult.
The value of a guarantor agreement is probably more in the threat and fear of legal action rather than in the reality of enforcement through the courts.
BUT there appears to be a better alternative: Name the home-owning guarantor as a joint tenant
• It is not necessary for all named tenants to live in the property for it to be an AST.
• LL can use S8G8 to pursue the guarantor.
• If there are issues detrimental to the guarantor, then guarantor can serve notice to quit once the tenancy becomes periodic.
Of course, LL still needs to vet the guarantor to the same standard to make sure that Guarantor is acceptable and does indeed own his home.
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