Guarantees and rent deposits

Guarantees

Landlords frequently seek a covenant from a tenant’s guarantor as 'principal debtor' or 'primary obligor' so that its liability is not merely secondary to that of the tenant (in which case the landlord would only be able to pursue the guarantor once it had exhausted all its remedies against the tenant). Even with this wording, the guarantor's liability can never exceed that of the tenant. The value of the guarantee to the landlord is that the guarantor may remain liable even if the landlord's claim against the tenant is unenforceable.

Formalities

The guarantee may be provided by way of a clause or schedule in the lease, or it may be entered into as a separate document. As a bare minimum, Section 4 of the Statute of Frauds 1677 provides that a guarantee will not be enforceable unless there is a memorandum or note of it which is:

•
in writing, and
•
signed by the guarantor or by some other person lawfully authorised by the guarantor

In addition, if the separate document is to be executed as a deed, it must comply with

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