Guarantor Agreements — Landlord Guide
A guarantor agreement gives landlords an additional layer of protection — a third party who is personally liable if the tenant fails to pay rent or causes damage. But only if the agreement is properly drafted.
We draft guarantor agreements as deeds, tailored to your tenancy and circumstances. We also advise on enforcement when a guarantor refuses to pay.
Overview
What is a Guarantor Agreement?
A guarantor agreement is a legally binding contract under which a third party — the guarantor — agrees to be personally liable for the tenant's obligations under the tenancy. If the tenant fails to pay rent, causes damage, or otherwise breaches the tenancy, the landlord can pursue the guarantor for the outstanding amount.
Guarantors are typically parents, family members, or employers. They are commonly required where a tenant has a limited credit history, is a student, is in receipt of benefits, or is a first-time renter.
A guarantor agreement is only as good as the document itself. A poorly drafted agreement — or one that has not been executed correctly — may be unenforceable when you need it most. We see this regularly when landlords come to us to enforce a guarantor agreement that was drafted without legal advice.
The most common problem is that the agreement was not executed as a deed. Without deed execution, a guarantee is unenforceable because there is no consideration passing to the guarantor. We draft all guarantor agreements as deeds.
When to Require a Guarantor
- Tenant has limited or no credit history
- Student tenant without independent income
- Tenant in receipt of housing benefit or Universal Credit
- Tenant is self-employed with variable income
- Tenant has a previous county court judgment
- Tenant is a first-time renter
- Tenant's income is below the standard threshold (2.5x annual rent)
Guarantor vs Rent Guarantee Insurance
A guarantor is a person who is personally liable. Rent guarantee insurance is an insurance policy that pays out if the tenant fails to pay. Both provide protection — but they work differently and have different advantages.
We advise on which is more appropriate for your circumstances. In some cases, both may be appropriate.
Required Content
What Must Be Included in a Guarantor Agreement
The following are the key elements that a properly drafted guarantor agreement must contain. Missing any of these can render the agreement unenforceable or create gaps that the guarantor can exploit.
Full legal name and address of the guarantor
Full legal name of the tenant(s) whose obligations are guaranteed
Address of the rental property
Scope of the guarantee — rent arrears only, or also damage and other obligations
Whether the guarantee is limited (capped at a specific amount) or unlimited
Duration of the guarantee — does it cover the whole tenancy or a fixed period
Clause preserving the guarantee notwithstanding any variation to the tenancy
Clause binding the guarantor's personal representatives (in case of death)
Execution as a deed — signed by guarantor in presence of independent witness
Confirmation that the guarantor has been advised to take independent legal advice
Common Pitfalls
Common Drafting Errors — and How to Avoid Them
These are the most common errors we see in guarantor agreements brought to us for enforcement. Every one of them could have been avoided with a properly drafted agreement.
| Error | Consequence | How to Avoid It |
|---|---|---|
Not executed as a deed | Agreement may be unenforceable as a guarantee — no consideration passes to the guarantor. | Always execute as a deed with an independent witness. |
No variation clause | Guarantor may be released if rent is increased or tenancy varied without their consent (Holme v Brunskill). | Include a clause preserving the guarantee notwithstanding any variation. |
No estate clause | Guarantee may terminate on the guarantor's death — leaving the landlord without recourse. | Include a clause binding the guarantor's personal representatives. |
Scope unclear | Dispute about whether the guarantee covers damage, legal costs, or only rent arrears. | Define the scope of the guarantee clearly — rent, damage, costs, or all obligations. |
Duration unclear | Dispute about whether the guarantee covers the whole tenancy or only the initial period. | State clearly whether the guarantee covers the whole tenancy (including any periodic continuation). |
Using a template | Template may not reflect current law, may contain errors, and is not tailored to your circumstances. | Use a solicitor-drafted agreement with professional indemnity insurance. |
Enforcement
Enforcing a Guarantor Agreement
Establish the Breach
Confirm the tenant has breached the tenancy — typically by failing to pay rent or causing damage. Gather evidence of the arrears or damage.
Formal Demand
Serve a formal written demand on the guarantor setting out the amount owed and the basis of the claim. Give a reasonable time to pay.
Money Claim
If the guarantor does not pay, issue a money claim at court. We advise on the prospects of recovery before you commit to costs.
CCJ & Enforcement
Obtain a County Court Judgment and enforce through attachment of earnings, charging orders or High Court enforcement.
FAQs
Common Questions About Guarantor Agreements
What is a guarantor agreement for a tenancy?
A guarantor agreement is a legally binding contract under which a third party (the guarantor) agrees to be liable for the tenant's obligations under the tenancy — typically rent arrears and damage to the property. The guarantor is usually a parent, family member or employer. If the tenant fails to pay rent or causes damage, the landlord can pursue the guarantor for the outstanding amount.
Does a guarantor agreement need to be a deed?
Yes. A guarantor agreement should be executed as a deed — signed by the guarantor in the presence of an independent witness who also signs. If the agreement is not executed as a deed, it may be unenforceable as a guarantee (because there is no consideration passing to the guarantor). We draft guarantor agreements as deeds to ensure they are enforceable.
Can a guarantor be released from their obligations?
This depends on the terms of the guarantor agreement. A poorly drafted agreement may release the guarantor if the tenancy is varied (e.g. rent is increased) without the guarantor's consent — under the rule in Holme v Brunskill. A well-drafted agreement will include a clause preserving the guarantee notwithstanding any variation to the tenancy. This is one of the most common drafting errors in guarantor agreements.
Does a guarantor agreement survive the death of the guarantor?
This depends on the terms of the agreement. Unless the agreement expressly provides that it binds the guarantor's estate, the guarantee may terminate on the guarantor's death. We include a clause in our guarantor agreements providing that the guarantee binds the guarantor's personal representatives.
What is the difference between a guarantor and rent guarantee insurance?
A guarantor is a person who agrees to be personally liable for the tenant's obligations. Rent guarantee insurance is an insurance policy that pays out if the tenant fails to pay rent. They serve a similar purpose but work differently. A guarantor is a contractual remedy — you pursue the guarantor through the courts. Rent guarantee insurance is an insurance claim — you claim on the policy. Both have advantages and disadvantages. We advise on which is more appropriate for your circumstances.
How do I enforce a guarantor agreement?
To enforce a guarantor agreement, you must first establish that the tenant has breached the tenancy (e.g. by failing to pay rent). You then serve a formal demand on the guarantor for the outstanding amount. If the guarantor does not pay, you can issue a money claim at court. We advise on the enforcement process and can issue proceedings on your behalf.
Get Started
Request a Guarantor Agreement
Whether you need a guarantor agreement drafted for a new tenancy, or you need to enforce an existing one, our landlord solicitors can help. Contact us for a no-obligation initial discussion.