Before diving into this article and downloading the Free Guarantor Application Form, I strongly advise for you to read the Tenant Guarantor Guide if you’re not familiar with the purpose or general principles of a tenant guarantor and contract.
But to give you a basic overview, a guarantor accepts the responsibility of being liable for rental loss, damages and any ensuing legal fees that is incurred by a tenant.
Generally, a guarantor is most useful for landlords if a tenant falls into arrears or causes damage to the property and then refuses to cover the costs. In those situations, the landlord can legally pursue the guarantor to cover the costs.
While it’s not a legal requirement for a guarantor to be part of a tenancy, I personally recommend ALL landlords to ensure their tenants have a guarantor in place, simply because it’s an added piece of security which doesn’t cost any extra to put in place. It’s a no-brainer.
Why a Guarantor Application Form?
While a landlord is trying to find new tenants, they will most likely have multiple viewings/applications, so at that point the most crucial step is to separate the wheat from the chaff. It’s in the landlord’s best interest to choose the most secure and reliable tenant. Landlord don’t want deadbeat tenants that are going to cause problems, right?
So to help ensure we get reliable tenants, most of us landlords require our prospective tenants to have a secure job, right? It’s also becoming increasingly common for landlords to require suitable guarantors. Failing that, the applicant may not pass the requirements of a ‘suitable’ tenant. Needless to say, we all have expectations, and we know what kind of tenants we want. Personally, I wouldn’t even consider a tenant unless they can provide a creditable guarantor.
This is where a guarantor application form is useful. While you should already be getting your prospective tenants to fill in a tenant application form (so you have their details on record and can short-list the applicants), you should also be doing the same for their guarantors. Simply, get your prospective tenant’s to get their prospective guarantor(s) to complete the application form so you can assess the guarantor’s suitability, and ultimately the strength of your prospective tenants application. The form gathers crucial information, like proof of identity, employment status, yearly income etc.
When considering a guarantor, you need to ensure that he or she is financially able to cover your tenants liabilities. For example, there is not much point in accepting a guarantor that doesn’t have a job, money or assets, because the chances of them being able to cover the tenant’s rent arrears is almost zero. So what would be the point? That’s why referencing the guarantor is just as crucial as referencing the tenant.
Here are the steps I take when referencing a guarantor, and my tips to you:
- Reference the guarantor just as you would when referencing any tenant, which should include a credit check (you can use one of several professional credit check services for landlords, which are all relatively inexpensive). Also, ideally meet them face-to-face so you can make your own judgement.
- Get the guarantor to complete an application form (free download available below).
Once you’re happy with a choice in tenant and their guarantor, you should get the guarantor to sign a Guarantor Contract, which is a legal contract enforcing the agreement e.g. making the guarantor legally responsible for accepting the liability on behalf the tenant in the event of the tenant being unable to meet their obligations under the tenancy agreement.
There are two methods of creating a binding contract. The first one, the Guarantor clauses are found as part of the tenancy agreement contract (with in the same contract). In this case, the tenant, landlord and guarantor sign the tenancy agreement.
The second type is a deed of guarantee, which involves a separate contract; almost like another tenancy agreement, but for the guarantor, which specifies their obligations.
Disclaimer: I'm just a simple landlord blogger; I'm not qualified to give legal or financial advice. Any information I share is my opinion based on my personal experiences as an active landlord, and should never be contrued as legal or professional advice. For more information, please read my full disclaimer.
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