With so many commercial tenants struggling to pay rent at present and some residential tenants not even paying rent at all with no risk of eviction, any ‘guarantors’ need to look carefully at where they stand.
Guarantors and former tenants (assignors) should always look out for section 17 notices under the Landlord and Tenant Act 1995 which may be a landlords next port of call to recover arrears. However, there are situations whereby a landlord’s right to claim under a guarantee agreement may be lost, and any guarantor with potential liability in the current Covid 19 pandemic would be well advised to take a fresh look at any such agreement and take professional advice before assuming or accepting such liability.
Similarly, landlords need to take care over losing their right to pursue a guarantor through inadvertent and seemingly beneficial action taken with the best intentions towards their tenants. Such action could prejudice their right at a later date to pursue a guarantor who had not been kept informed.
An agreement innocently made as a concession to assist a tenant may inadvertently change the terms of the lease which could in turn release the uninformed guarantor from future liability.
It is important to remember that, in the case where there is a guarantor named on the lease, then all parties need to be taken into consideration should changes of any sort, temporary or permanent, be made.
For further information, contact Laurence Barton from our Portfolio Management team on 0207 907 3706 or via email to email@example.com.