Do you know what amuses me? When someone willingly acts as a Tenant Guarantor for their nearest and dearest, but then as soon as they’re required to take responsibility for being a Guarantor (i.e. to pay someone else’s rent arrears), they shamelessly act victimised.
The question has to be asked, what did they think they were signing up for?
The purpose of this blog post is to help everyone understand the responsibilities of a Tenant Guarantor BEFORE actually becoming one, to help understand the risks and avoid the apparent confusion!
What is a Tenant Guarantor?
A “Guarantor” is commonly a friend or family member of the tenant and has agreed to vouch for the tenant and accept the liabilities on behalf of the tenant. Essentially, in the event of a tenant being unable to meet their obligations under the tenancy agreement, whether it is for overdue rent, damage to the property or whatever, the Guarantor is legally bound to accept the liabilities on behalf of the tenant. There’s tonnes more information in the Tenant Guarantor Form page.
I regularly receive an annoying amount of emails from teary-eyed mascara-dripping Guarantors asking two of the following questions:
- How can I stop being a Guarantor for a tenant?
- My friend has fallen into arrears, and I’m his/her Guarantor, how do I get out of being liable for the debt?
Let me show you a prime example of what I’m talking about. I received this ridiculous piece of shit email last week:
I’m a guarantor for someone for a rented property. I have just recently found out the reason they needed a guarantor was cause the landlord thought she wasn’t working. She is now in arrears, is there anyway I can get out of being liable for her debt? Please help, I am at my wits end.
I’m sure the lady that sent me the email is a terribly nice person, so I take no joy in calling her a tediously underdeveloped chimp, but unfortunately that’s exactly what she is. The million dollar question is, what the hell did she think she was signing up for when she agreed to be a Tenant Guarantor, and why is she at her wits’ end?
Essentially, she’s got her nuts in a twist because she’s being asked to act upon the responsibility she agreed to. Heaven forbid! Of course, she’s not the only one; this is a common cry among guarantors.
It’s terribly frustrating.
There’s nothing wrong with being a Tenant Guarantor
Don’t get me wrong, there’s absolutely nothing wrong with being a Guarantor for someone. By all means, be a Guarantor for someone you love and/or trust, just don’t shrivel into a wheezing blubbering mess if you’re actually required to take on the responsibility of being a Guarantor when that’s exactly what you agreed to do.
What to consider before becoming a Tenant Guarantor
With the objective of preventing this kind of stupidity from spreading much further, I’m going to jot down a list of points for prospective Guarantors to consider before agreeing to anything. If you’re in that position, you should carefully understand what you’re being asked to do, and then consider whether you actually want to do it.
1) Do you understand the responsibilities of a Guarantor?
I swear to God, 90% of the people that are a Guarantor don’t even have a clue what they’re liable for, they’re just happy they’re helping someone out. Very cute, but dangerously stupid.
To reiterate, a “Guarantor” has agreed to vouch for the tenant and accept the liabilities on behalf of the tenant. Essentially, in the event of a tenant being unable to meet their obligations under the Tenancy Agreement contract, whether it is for overdue rent, damage to the property or whatever, the Guarantor is legally bound to accept the liabilities on behalf of the tenant.
Fully understand what responsibility you’re taking on.
2) Can you REALLY afford to pay someone else’s debt (not just hypothetically, but in reality)?
I think the main reason so many people agree to being Guarantors is because they believe they’ll NEVER be put into the situation of actually having to pay the debt of those they trust. They basically think it’s a hypothetical scenario because they’ll never be let down by those they trust. “It will NEVER happen to me”, says the idiot while being struck by lightening.
Unfortunately, the only certainties in this life are taxes and death. A friend and/or family member never falling into arrears is a far cry away from being a certainty.
Consider the implications on your own personal finances if the tenant you’re vouching for DOES fall into hardship. Can you REALLY afford to pay the debt, and more importantly, would you feel comfortable doing so?
In situations like this, it’s always worth considering the worst possible outcome.
3) To what level do you trust the person you’re being a Guarantor for?
Trust comes in many, many, many layers, and you need to calculate to what level you trust the tenant.
For example, I would trust my work colleague to pick up my Hugo Boss suit from the dry cleaners, but I wouldn’t trust him with in a 10 mile radius of my girlfriend after he’s intoxicated his liver with a bottle of Vodka. Common sense.
Calculate which level of trust you have with the tenant, and if you’re left with concern, maybe that’s your gut instinct telling you to back-the-fuck-off from the situation.
4) Are you being pressured into being a Guarantor?
From my experience, most Guarantors are either family members or extremely close friends of the tenant. So there’s usually a feeling of emotional obligation pushing us into the direction of being a Guarantor, even if it’s subconscious.
If you feel remotely pressured into being a Guarantor (even if it’s your own moral obligation pushing you, and not necessarily the tenant’s) or there’s a feeling of unease, even if it’s ever so slightly, I would think twice.
Emotional guilt tends to push us into a lot of situations we don’t really want to be in. Yes, we love our friends and family, and we want to do everything humanly possible to help them, but this is one of those situations where need to think about number one.
5) There is zero reward for being a Guarantor
Understand, there is ZERO reward for being a Guarantor. Well, besides from self-satisfaction of helping out someone you love. But that don’t mean shit, especially when you’re left paying their bills.
Seriously! There is no opportunity for financial gain, it doesn’t help your credit rating and you don’t get compensated for the tenant’s good behaviour.
It’s one of those acts of kindness that you do purely out of love, or whatever!
6) Will you panic/worry/stress if you have to pay the tenant’s debts?
So, assuming your nearest and dearest does rack up a debt that falls onto your lap, how would you feel about it? Like I previously said, it’s always best to approach this situation with the worst possible outcome in mind. If you think it’s going to cause you stress, then don’t do it.
There’s no point in both of you (you and the tenant) being stressed over the same situation. So if taking on the debt of the tenant is going to inflict additional burden on yourself, forget about it.
7) How strong is your relationship?
I’ve seen best friends of 20 years become enemies over money. It happens all the time. Hell, just watch Judge Judy, most of the cases on that programme involve family members and best friends having a cat fight over money. Great entertainment, but it’s embarrassing garbage.
Every relationship has their breaking point, and you can usually find that point with a financial amount.
If the tenant (your close friend/relation) left you responsible for a pile of debt, would you carry any resentment towards them? If so, don’t put yourself into the situation where your friendship/relationship is on the line. It’s probably not worth it.
Anyone got any Guarantor nightmares to share? Comment box below…
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.