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Being A Guarantor On A Business Shop Rental.
Someone I know is a guarantor to her friends business property rent. Which her friend took out on a 5 yr contract. That was 2 yrs ago. And she has found out that the business isn’t doing very well and her friend has fallen behind in the rent. She is worried her friend is going to just wash her hands of the business. She is worried that she may end up having to pay the rent. Is she right to be worried?
Answers
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There's a bit of a legal loophole here (I speak from experience now). If your friend signed as guarantor in the presence of two witnesses (one a solicitor) who signed to witness your friend's signature as guarantor, then yes she is legally bound to pay any rent owing. However, as often happens, if the owner of the business or their representing solicitor...
12:47 Wed 25th Aug 2021
There's a bit of a legal loophole here (I speak from experience now).
If your friend signed as guarantor in the presence of two witnesses (one a solicitor) who signed to witness your friend's signature as guarantor, then yes she is legally bound to pay any rent owing.
However, as often happens, if the owner of the business or their representing solicitor simply posted the form out to your friend for it to be signed in private and not in the presence of witnesses who would attest to the reliability of your friend's signature, she could claim that she did not sign the guarantor's form and that the signature therein is false, and therefore she cannot be held responsible for the rental debts.
This happened to me. Tenants in a house I owned owed six months rent when they finally moved out.
When the guarantor was contacted to claim the unpaid rent, the guarantor claimed the signature on the form was not his. My solicitor had posted the form out to him for him to sign at home, so there were no legal witnesses to his signature. The guarantor therefore did not pay the outstanding rent.
I was advised that the legal costs of trying to prove that the signature was indeed the guarantor's would far exceed the amount of rent outstanding, so I cut my losses and left it.
If your friend signed as guarantor in the presence of two witnesses (one a solicitor) who signed to witness your friend's signature as guarantor, then yes she is legally bound to pay any rent owing.
However, as often happens, if the owner of the business or their representing solicitor simply posted the form out to your friend for it to be signed in private and not in the presence of witnesses who would attest to the reliability of your friend's signature, she could claim that she did not sign the guarantor's form and that the signature therein is false, and therefore she cannot be held responsible for the rental debts.
This happened to me. Tenants in a house I owned owed six months rent when they finally moved out.
When the guarantor was contacted to claim the unpaid rent, the guarantor claimed the signature on the form was not his. My solicitor had posted the form out to him for him to sign at home, so there were no legal witnesses to his signature. The guarantor therefore did not pay the outstanding rent.
I was advised that the legal costs of trying to prove that the signature was indeed the guarantor's would far exceed the amount of rent outstanding, so I cut my losses and left it.
Be wary of following the path suggested by Ringlet!
If the guarantor states that she did not sign as such, she is in effect stating that the person renting the property committed fraud by false representation which, if proved, could see them jailed for up to 10 years.
If police investigating the alleged fraud later discovered that the statement from the guarantor (denying that she'd signed the form) was false, she could then be prosecuted for attempting to pervert the course of justice. Such an offence almost always results in a substantial prison sentence.
If the guarantor states that she did not sign as such, she is in effect stating that the person renting the property committed fraud by false representation which, if proved, could see them jailed for up to 10 years.
If police investigating the alleged fraud later discovered that the statement from the guarantor (denying that she'd signed the form) was false, she could then be prosecuted for attempting to pervert the course of justice. Such an offence almost always results in a substantial prison sentence.
yes - she is right to be worried
private renting is a completely different ball game (*)
Commercial letting they expect the rent for the whole time ( 3 y ) . guaranteeing is a big deal. she needs to speak to the tenant and when things go tots up - to the landlord.
I cannot recommend saying something you signed is something you didnt sign
(*) I usually - - er one of my friends who is a landlord, says to the guarantor, get them out and I wont sue - possession being 90% of the law. Four days is enough to clear a house and clear off.
private renting is a completely different ball game (*)
Commercial letting they expect the rent for the whole time ( 3 y ) . guaranteeing is a big deal. she needs to speak to the tenant and when things go tots up - to the landlord.
I cannot recommend saying something you signed is something you didnt sign
(*) I usually - - er one of my friends who is a landlord, says to the guarantor, get them out and I wont sue - possession being 90% of the law. Four days is enough to clear a house and clear off.
If the guarantor has assets to protect they should be very wary. If they don’t pay the rent and have, say, a house then the landlord could petition for her bankruptcy and then she could lose her house unless she pays ALL her debts at the date of the bankruptcy order plus £8k of fees to the official receiver.
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