Advising rent guarantors

Alexa Walker explains how to advise a guarantor who has been asked to pay a tenant’s rent debt, what information to gather, and the process and risks involved in raising a dispute in court.

Published October 2022

What is a guarantor?

A guarantor is someone who agrees to pay a debt on behalf of someone else under a written agreement called a guarantee. The principal agreement for a tenancy guarantee is between the landlord and the tenant. The guarantor is someone who doesn’t live at the rental property but agrees to pay the rent if the tenant fails to.

The guarantor is often a family member or friend of the tenant. The landlord usually requires the guarantor to be a homeowner and to be employed so the landlord has a better chance of recovering a debt from them if the tenant does not pay. The landlord could take steps to enforce an unpaid debt by securing it on the guarantor's home, or make deductions from their wages.

The guarantee agreement sets out what the guarantor is liable to pay. It usually specifies unpaid rent and damage to the property.

When the landlord can demand payment from the guarantor

The landlord can demand unpaid rent from the guarantor the day after it falls due. The guarantor is not obliged to pay anything until they have been asked. The landlord and tenant might work out payment difficulties between themselves, without involving the guarantor at all. If that happens, the guarantor doesn’t have to do anything.

The guarantee is not registered on the guarantor’s credit reference file, so their credit rating is not harmed if they fail to pay when asked. The debt is only registered if the landlord issues a court claim and gets a County Court judgment against the guarantor.

How to gather the guarantor's information

Gathering the right facts and documents from the guarantor will help you understand their rights, and you’ll have the relevant details if you need to do more research or get legal advice. You’ll save time responding to the claim if the landlord decides to take the guarantor to court.

The guarantee is a separate agreement from the tenancy agreement. You’ll need to see both documents, along with any variations to the tenancy or the guarantee.

The initial interview

Put enough time aside for the initial information-gathering interview to go through the situation in detail. Ask the guarantor to explain:

how the guarantee was given
what contact they had with the landlord or agent
whether the tenancy was signed first, or the guarantee
their relationship with the tenant
how they felt about giving the guarantee
what has happened since the guarantee was signed

Write down as much information as you can using the guarantor’s own words. If the case goes to court, you can use these records to help them write a witness statement.

Ask the guarantor about their financial situation. If they can't pay off the debt, they could discuss their options with a debt adviser. Some types of insolvency (like bankruptcy) can write off a guarantee. Get the information you'll need for a debt advice referral, in case you need to make one when the interview is over.

Get information from the tenant

It helps if the guarantor is in contact with the tenant, so they can check details like how much rent is owed, or what type of property damage has occurred. The tenant might have copies of documents like a renewed tenancy or photographs of the property that the guarantor doesn’t have.

In practice, it is common for the relationship between the tenant and the guarantor to have broken down. Guarantors can be understandably unhappy at being asked to pay the tenant’s debt, especially if they were told it was just a formality. They might not be on speaking terms, and the guarantor might not know the location of the tenant if they have moved out or been evicted from the property.

Get information from the landlord

Ask the landlord for copies of any documents the guarantor doesn’t have and can't get from the tenant. The court could make a costs order against a landlord who issues a court claim without supplying copies of documents they seek to rely on. Point this out to the court if the landlord is not willing to supply the requested information.

When a guarantee can be challenged

Challenging a guarantee because it was not entered into correctly is the most straightforward way for the guarantor to escape liability for the debt. A court might be persuaded to rule in favour of the guarantor on the evidence of the paperwork alone.

Joint guarantors

If there is more than one guarantor, all the joint guarantors must sign the agreement. If one or more of them do not sign it is not enforceable against any of them. This is most common for parents guaranteeing tenancy agreements for student accommodation.

Guarantees signed after the tenancy agreement

A guarantee that is given after the tenancy agreement has been signed must be executed as a deed, with all the necessary formalities, or it can’t be enforced.

Adviser tip — gather evidence about the signing of the guarantee

I helped a debt adviser challenge a guarantee where the tenancy was signed earlier in the same day the guarantor signed their agreement. When a guarantee is signed after the principal agreement, it must be executed as a deed. In this case it was not, but both the principal agreement and the guarantee showed the same date of signing.

I interviewed the guarantor to get full details of how and when both documents were signed. The guarantor had text messages from the landlord’s agent and the tenant confirming they met with the guarantor after the tenancy was signed. The court struck out the landlord’s claim without holding a hearing, as the judge was convinced that the evidence of the text messages was strong enough to find for the guarantor.

New tenancies and contract changes

The guarantee only applies to the initial tenancy unless it states otherwise. Tenancy variations are can be difficult to spot for anyone who is not already familiar with the law covering security of tenure.

A variation to the tenancy must be agreed by the guarantor – including if a fixed-term tenancy becomes a statutory periodic tenancy. Get expert housing advice if you need help figuring out what counts as a variation.

Pressure to sign the guarantee

The courts can release a guarantor from their liability if they were pressured into giving it, or the tenant took advantage of a position of power. This is called undue influence. It is a complex area of law that should normally only be undertaken by a solicitor or expert adviser.

How to challenge the debt

The guarantor should explain the reason for the dispute to the landlord. The landlord could be persuaded not to start court proceedings for the debt if they think the guarantor has a defence that might be successful. Challenging the debt could make it more likely the landlord will try to recover the money directly from the tenant.

How a landlord recovers the debt through the courts

The landlord can issue a claim in the County Court for an unpaid debt. They could issue the claim straight away if the guarantor doesn’t pay when the tenant misses their first rent payment.

By issuing a claim as soon as a rent payment is missed, the landlord is limiting the claim to that month only. They would have to issue a new claim for each missed payment. In practice, the landlord might wait to evict the tenant first, so they can issue a court claim for the full amount of rent arrears.

Check if the landlord followed the pre-action protocol

The landlord’s claim is covered by the pre-action protocol for debt claims even if they are an individual. That means the landlord must send the guarantor a letter of claim with information about the debt, how much is owed, and what interest and charges have been added.

How to respond to the landlord’s claim

The guarantor must respond to the County Court claim form, or judgment will be entered against them automatically. The guarantor can either admit the claim (or part of it) and offer payment, or defend the claim.

Help the guarantor identify any legal arguments they have. Keep things simple by sticking to the facts, especially if they won't have court representation.

However the guarantor responds, they should include a witness statement to explain the facts of the case to the court. Help them prepare a convincing statement by asking questions and recording their answers. Dig out notes from the initial interview to make sure nothing has been missed out.

Adviser tip - submit a convincing witness statement

I advised a guarantor facing a County Court claim where the landlord hadn’t started possession proceedings to evict the tenant even though the rent arrears debt was over £10k. The guarantor’s liability was growing every month, and because they were a retired homeowner with no mortgage, the landlord assumed they would get their money by securing the debt on the guarantor’s home.

After hearing the guarantor’s side of the story, the judge made an order to pay off the debt at £1 per month. This case highlights the importance of good witness evidence. A witness statement allows the guarantor to put their version of events to the court, which could include poor treatment by the tenant or landlord. If the court hadn't had sympathy with the guarantor, they could have lost their own home.

What happens if the guarantor defends the claim

The court can decide the claim straight away if either the claim or the defence is strong enough to allow a judge to make a summary judgment. In most cases, sending off the defence form to the court is not the end of the matter for the guarantor.

Prepare the guarantor for the process and explain what to expect. Think about what support you can offer to prepare court documents and attend court hearings.

Follow the court's instructions

In most cases, the court sends out instructions telling the parties what to do next. It is vital to keep to the deadlines set by the court. Failure to do so can mean extra costs, having to file costly applications, and even result in the court refusing to consider the defence at all.

Get help with court hearings

The guarantor might have to attend a court hearing in person or over the phone. Going to court can be intimidating, so check they have someone to accompany them who understands the background of the case if you can’t.

Be especially careful not to raise complex legal arguments that the guarantor won’t be able to explain or answer questions about. The guarantor should get legal representation if their defence is very technical, for example because it relies on undue influence. The case won’t be eligible for legal aid, but a pro bono solicitor might be able to help.

Warn the guarantor about the risk of costs

The costs of the court proceedings are usually paid by the losing party. For most claims under £10,000, no costs are awarded apart from the cost of issuing the claim and the hearing fee. For claims above that amount, the costs can be significant, including paying for the other side’s solicitor. Anyone considering defending a court claim should be advised about the risk of costs.

Legal background of guarantor agreements

There is a long history of guarantor disputes, with no single piece of legislation governing guarantor agreements. They exist under statutes relating to contracts and deeds, along with some case law.

Guarantees have been used for loan agreements, and especially business debts, for many years. One important court case affecting guarantors dates back to 1878, and relevant legislation even earlier to 1677.

Understanding the guarantor’s liability can mean lots of research on cases and statutes that aren’t always freely available, and some important questions remain unanswered. Most of the reported court cases don’t deal directly with tenancy guarantees, instead addressing related issues like how a deed is signed, or when a contract can be varied.

Read more on Shelter Legal about Challenging guarantee agreements, which has footnotes to the relevant law and is essential reading for anyone helping a guarantor challenge their liability.

Further resources

Shelter Legal

Challenging guarantor agreements – tenancy agreements, loan agreements and undue influence in guarantees.

Money claims and judgments – money claims process including how to defend a court claim or admit a claim and ask to pay by instalments.

Witness statements – how to set out the guarantor's witness evidence in an format that the court will accept.

Second tier advice for professionals

Shelter's Specialist Debt Advice Service can advise professionals about guarantor liability and the money claims process.

Free legal advice for individuals

LawWorks can put guarantors in touch with pro bono solicitors who could take the case on, especially if the debt is large and the guarantor's home would be at risk.

Advocate is a charity that finds free legal assistance from volunteer barristers.