If you’ve signed as a guarantor for a tenancy, you might be wondering whether your responsibilities continue after the fixed term has ended. It’s a common question and one that many people don’t fully understand when they first agree to become a guarantor. In the UK, the answer isn’t always straightforward, as much depends on the wording of the guarantor agreement and the type of tenancy involved.
Understanding how long you’re responsible as a guarantor is important, especially if you’re concerned about financial obligations continuing beyond the initial term. This article will break down everything you need to know about your liabilities, in simple terms, and help you navigate this often confusing situation.
What happens to a tenancy after the fixed term ends?
When the fixed term of a tenancy (typically 6 or 12 months) ends, the tenant doesn’t just have to move out unless notice has been given by either the landlord or the tenant. If no one does anything, the tenancy usually continues as a periodic tenancy. This type of tenancy is often called a statutory periodic tenancy and operates under the same terms as the original tenancy agreement, except that it rolls on a week-to-week or month-to-month basis.
For example, if the tenant was paying rent every month under a 12-month fixed tenancy, once that 12 months is up, the tenancy becomes a periodic one, with rent continuing to be paid monthly. This can go on indefinitely unless the landlord or tenant formally ends the tenancy with proper notice.
Does your liability as a guarantor continue beyond the fixed term?
The crucial question for you as a guarantor is whether your responsibilities continue after the original fixed term of the tenancy ends. Unfortunately, there is no simple, one-size-fits-all answer to this. Your liability depends entirely on the specific terms laid out in the guarantor agreement that you signed.
If the guarantor agreement covers the fixed term only
In some cases, the agreement might specifically state that your obligation as a guarantor ends when the fixed term ends. In this situation, once the tenancy becomes a periodic one, you would no longer be liable for any unpaid rent or damages after that point.
If the guarantor agreement includes the periodic tenancy
However, many guarantor agreements are worded in such a way that your liability continues beyond the fixed term, covering any ongoing tenancy, including a periodic one. This means that even if the fixed term has ended, you could still be responsible for paying the rent if the tenant doesn’t. The wording might say something like, “The guarantor agrees to be responsible for any rent or other liabilities for the entire duration of the tenancy.” This type of clause means your liability won’t stop until the tenancy formally ends through notice.
Why you should check the guarantor agreement carefully
The key to understanding whether you’re still liable after the fixed term is in the fine print of the guarantor agreement. Many people don’t fully read or understand the agreement when they sign it, which can lead to surprises later on. It’s not uncommon for people to assume they’re only responsible for the original term, only to find out much later that their liability has continued for years.
If you’re unsure about what you signed, now is the time to review the agreement carefully. Look for any clauses that mention the continuation of liability, periodic tenancies, or ongoing responsibilities. If the wording is unclear or you’re unsure, it might be worth seeking legal advice to clarify your position.
What if the tenancy continues for years?
It’s entirely possible for a periodic tenancy to continue for many years. In some cases, tenants stay on for a long time without ever signing a new fixed-term agreement. If the guarantor agreement says you’re responsible for the entire duration of the tenancy, this could mean you’re still liable for unpaid rent even years after the original fixed term ended.
This is particularly concerning if you didn’t realise that your liability would continue indefinitely. For example, if the tenant runs into financial trouble or simply stops paying rent, the landlord can still come to you for payment as long as the tenancy is ongoing. This can lead to significant financial stress, especially if you’ve moved on with your life and no longer expected to have this responsibility hanging over your head.
What happens if you want to stop being a guarantor?
If you no longer wish to be a guarantor, the process of ending your liability isn’t as simple as just notifying the landlord. Generally, once you’ve signed the guarantor agreement, you can’t just walk away from it. The only way to be released from your responsibilities is if the landlord agrees to release you, which is unlikely if the tenant is still living in the property and paying rent.
Landlords rely on guarantors to provide security, especially if the tenant has a poor credit history or is considered high risk. If the rent hasn’t been paid, the landlord is even less likely to release you, as they will want to retain the ability to claim unpaid rent from you if necessary.
One option might be to negotiate with the landlord to end the tenancy or for the tenant to find a new guarantor. However, this can be difficult, and the landlord is under no obligation to agree. It’s worth considering these potential complications before you agree to act as a guarantor in the first place.
What if the tenant stops paying rent?
One of the biggest risks you face as a guarantor is if the tenant stops paying rent. If this happens, the landlord can come directly to you for payment. This means you could be responsible for paying any arrears that the tenant has accumulated, and the amount could quickly add up if the tenant has missed multiple payments.
It’s important to know that if the landlord takes legal action against you for unpaid rent, they can register a County Court Judgment (CCJ) against you if you fail to pay. This could seriously damage your credit rating and make it more difficult for you to borrow money or get credit in the future.
In addition, the landlord could also pursue further legal action, including sending bailiffs to your home or placing a charge on your property to recover the money owed. This is why it’s essential to fully understand the risks before agreeing to be a guarantor and to regularly check with the tenant to ensure they’re keeping up with their payments.
Should you get legal advice before becoming a guarantor?
If you’re considering becoming a guarantor, it’s always a good idea to seek legal advice before signing anything. A solicitor can help you understand exactly what you’re agreeing to and can explain the full extent of your responsibilities. They can also help you negotiate the terms of the guarantor agreement to ensure that your liability doesn’t continue indefinitely.
Being a guarantor is a serious commitment, and it’s not something to be taken lightly. While you may be helping out a friend or family member, you’re also putting your own financial future at risk. By fully understanding what you’re signing and seeking professional advice if necessary, you can avoid unpleasant surprises down the line.
What to do if you’re already a guarantor and want to exit
If you’re already acting as a guarantor and want to end your liability, your first step should be to review the guarantor agreement. Look for any clauses that outline how you can be released from your responsibilities. In many cases, you’ll need the landlord’s consent to be removed as a guarantor, which, as mentioned earlier, can be difficult to obtain.
If the tenant is in arrears or you’re worried about your liability, it might be worth speaking to a solicitor to explore your options. They can help you understand your rights and negotiate with the landlord if necessary.
Conclusion: Understanding your liability as a guarantor is crucial
Being a guarantor can seem like a simple way to help out a friend or family member, but it comes with serious responsibilities that can last much longer than you might expect. If the tenancy continues beyond the fixed term, your liability could continue as well, potentially for many years.
To protect yourself, it’s essential to fully understand the terms of the guarantor agreement and seek legal advice if necessary. And if you’re already a guarantor and want to exit, don’t wait until the situation becomes more complicated – take action now to understand your position and explore your options.
Understanding your obligations as a guarantor will give you peace of mind and help you avoid unexpected financial stress in the future.
