How do I set up a Guarantor Agreement?

 

 

A Guarantor will generally be required to do two things:

 

· Complete a Guarantor’s application form

 

· Sign a Guarantor’s Agreement

 

There is no statutory documents or format for these, but generally the application form is similar to a tenancy application. It can form part of the tenancy agreement, but it is better practice for it to be a separate document.

 

Credit searches and references should be checked and the following information gained:

 

 

 

A Guarantor will generally be required to do two things:

 

· Complete a Guarantor’s application form

 

· Sign a Guarantor’s Agreement

 

There is no statutory documents or format for these, but generally the application form is similar to a tenancy application. It can form part of the tenancy agreement, but it is better practice for it to be a separate document.

 

Credit searches and references should be checked and the following information gained:

 

· The individuals identity

 

· The property to be let

 

· The Guarantors personal details

 

· Redundancy information

 

· Legal history and any CCJs

 

· Employment history

 

· Accountants, solicitors, character referee

 

· Bank and trade references for businesses

 

· Declaration allowing credit search and signature

 

A Guarantor Agreement acts as a legal piece of insurance to protect the landlord against rental loss, damages and any legal fees that can be incurred by the tenant. It is not a substitute for an Assured Shorthold Tenancy Agreement with the tenant, it should always be a supplement to it.

 

The Guarantor agreement with the landlord should include:

 

· The date of the agreement

 

· The term to which it applies, when and how the obligation ends

 

· The signatures and names of the parties to the agreement

 

· The property

 

· The names of the tenant/s

 

· Exactly what the Guarantor is agreeing to:

 

Eg If the tenant defaults in the payment of rent laid down as per the tenancy agreement, the guarantor will pay the landlord.

 

If the tenant does not observe his/her obligations as set out in the agreement, the Guarantor will pay all losses, damages, expenses and costs that are incurred as a result of the tenant default

 

· Signatures – Guarantor and landlord, possibly witness of Guarantor

 

It should be signed before the tenancy agreement is signed. It is also unwise to allow the tenant to take the Guarantor agreement away for them to sign as it has been know for tenants to forge Guarantors signature. If they don’t sign in front of you, make sure that the signature is witnessed by someone you can trust, who can vouch for their identity.

 

The wording of the agreement is crucial. It is a legal contract and will be strictly enforced by the courts according to how it is worded. It does not need to be a lengthy document however, and a letter would be acceptable – suggested drafts are given in the section below.