Guarantor in tenancy agreement

[SmallPin]

I signed as a guarantor for a friend in a tenancy agreement which was for a calendar year (28th July 2005 to 27th July 2006).

Today I received a letter from the Landlord threatening legal action as the tenant had not paid the last month rent.

This is the first time that the landlord has written to me and I did not sign an extention to the contract.

Am I still liable considering that the agreement which I signed ended in July 2006 (more than a year ago)?

Thanks in advance

[philegal]

Hi,

You should not be bound by the extension. Unless there is an automatic renewal clause (to your acting as guarantor) in the lease agreement (I assume this is part of the lease agreement and not a separate agreement). Normally your liability as guarantor should be time-bound and when that period expires you're free (if nothing happened during the period covered - you would still be liable for the unpaid rent if the non-payment happened within the covered period although the landlord might have thought of going after you only after the period expired).

[LimeLegal]

If the agreement was for domestic property it can be automatically renewed at the end of the 6 or 12 month term of the original agreement. Normally the guarantee is unlimited ie it follows the agreement for as long as the agreement is in place unless an earlier release date was negotiated with the landlord at the time of signing which I think is unlikely.

[SmallPin]

Thanks for the two replies:

I have read the contract over and over again: First it's a domestic contract. The contract does not state anywhere that there is/was an automatic renewal clause. According to the letter from the landlord the non-paymenty has only just occured - that is not, within the time frame of the contract.

I have since been told by the tenant that when the agreement/contract ended the landlord wanted to new contract entered into but this was never done due to the tenant and landlord unable to reach an agreement. So the tenant (with the verbal agreement of the landlord) continued paying the same(original) rental payment monthly.

Personally, I would like to see the landlord get what is owed to him, but by threatening me - only gets me hot under the collar.

I have a copy of the contract and it does not contain any clauses or sections on renewal.

[eequals]

On the face of it from your post, if the contract specifically states that the agreement was to run for one year only and that the issue regarding unpaid rent has arisen since the term of that agreement has run out, then I fail to see how an action against you could succeed.

However in the light of LimeLegal's post I think that a short meeting with a solicitor would be a good idea.

Joe

[LimeLegal]

The law relating to domestic tenancies provides for renewal without the need for a new contract providing both parties agree. This is a provision of statute and does not therefore need to be in the agreement.

This is why you should never sign a personal guarantee without taking legal advice. Worth you taking free advice from your local CAB if you have all the document copies, but this is a pretty common misunderstanding on guarantee provision on domestic tenancies.

[eequals]

I take your point Lime Legal but if automatic renewal of a guarantee is provisional on both parties agreeing so to do, such agreement would surely need to be part of the contract would it not? How can the landlord claim agreement on such a matter without any evidence to support it?

Joe

[LimeLegal]

It depends on the wording of the guarantee, ie you can leave the guarantee open to reflect the agreement including the possibility of renewal or ensure the guarantee is for a fixed period. We don't have sight of the guarantee but if the Landlord is calling it in it may well be an open guarantee on that tenancy agreement which runs for as long as that tenant is in occupation.

[eequals]

I cannot see how any claim can be made against you, simply because the time limit (for one year to 27th July 2006) is a condition of the contract. This is why I questioned the post that said a domestic contract is automatically renewed. For there to be an automatic renewal notwithstanding the fact that a strict time limit for which the guarantee is to run is written into the contract, would be a new one for me in the English law of contract.

Given the above I would simply state your position at this stage, referring this landlord to the terms of the contract between the two of you and wait on events. If he gets a solicitor involved, that will be the time for you to do the same.

Joe

[LimeLegal]

The time limit in a domestic tenancy is not a condition of the tenancy agreement as the tenant is protected under statute for the first 6 months and all that happens to the end of the term ie 12 months ( note not a normal contract).

The law relating to these agreements allows for earlier termination on notice by the tenant and the landlord. The agreement will also state that the terms of renewal are as per statute. It may not provide wording you recognise as a renewal without referring to the rights under the actual statute.

Given the landlord can apply now for possession of the property and thus release you from your obligations on the guarantee, once possession is given, you need to chase the landlord down as to what he is doing to reduce the loss. This is also in addition to what steps you are taking with the tenant to ensure the guarantee is not required to be paid by you.