Renting out property can be very lucrative, but there are risks attached to it. If you do have property to let and are worried about getting your fingers burned via unpaid rent or damage being caused to your asset, you may well wish to have a tenant guarantee drawn up.
You may have found what appears to be the perfect personable tenant or tenants, but could still have doubts about their ability to pay due to their employment status or other factors, even if you are confident they will treat your property with the respect it deserves. If this is the case, a tenant guarantee can provide you with the peace of mind that you require. You can either include a tenant guarantee in the tenancy agreement or get the tenant’s guarantor to sign a separate deed of tenant guarantee.
Dealing with multiple tenants
One of the problems with including a guarantee section in the main tenancy agreement is that this can be impractical where you have multiple tenants with different guarantors i.e. people, normally parents, who will pay the rent and cover any damages if the tenants cannot. It is not very practical for all guarantors to meet you in person to sign the document, and there is a significant chance it will get lost if it needs to be passed around.
A separate deed of tenant guarantor needs to either be signed before the tenancy or as a deed, which means signatures will need to be witnessed. The guarantor will need to read and be satisfied with the tenancy agreement before the deed of tenant guarantor is signed.
Joint Tenancy Agreements
If a joint tenancy agreement is in place and rent is unpaid and damage occurs, tenants are jointly and severally liable. This means innocent tenants can be forced to cover losses caused by their housemates, and can make some guarantors unwilling to sign. In the vast majority of cases, tenants adhere to the terms of their tenancy agreements, cover damage they have personally caused and do pay their rent in full and on-time, minimising the likelihood of guarantors paying for the actions of other tenants.
How we can help
We may be able to assist you if you are having trouble to convince guarantors to sign deeds by drawing up guarantor-friendly deeds. Guarantors are normally signed up for the fixed terms of tenancies. If tenants remain in the property after the fixed-term and guarantors refuse to provide cover beyond this point, landlords may ask their tenants to find another guarantor. Guarantees are automatically cancelled when new tenancy agreements are signed or terms of existing agreements are changed. In these circumstances, the guarantor will need to sign a new deed or be replaced with another guarantor. This is because guarantors need to have approved and agreed to any terms that are in place at any time.
At HS Lawyers, we can come to your assistance if you require any help with drawing up tenancy agreements and deeds for guarantors. HS Lawyers have expert and experienced property solicitors based in Birmingham, wolverhampton and Peterborough who are readily available to discuss with you if you require any help or legal advice related to property law matters which include conveyancing, land lord and tenant matters and many more. If you are looking to buy or sell a property or looking to rent and need legal advice related to that Contact us on 0121 525 2555 / 3100 today and arrange an appointment with one of our experienced birmingham property solicitors now on 0121 525 2555 or fill in the contact us form and we will get in touch.