PRACTICE indicates that a landlord needs a guarantor of his tenant for the payment of the rent and for the faithful compliance with the terms of the tenancy agreement. The tenant, apart from the payment of the rent, undertakes various obligations according to the use of the premises, including the demolition of a separating wall, other alterations or additions which he must restore at the expiration of the tenancy.
In order for the landlord to be secured, the guarantee given must be clearly worded without ambiguity or vagaries. In a tenancy agreement of a specific time period, the guarantee covers only the said period. The fact that the rent is payable monthly or periodically does not change the validity of the guarantee. When the tenancy expires or is renewed or becomes statutory, the guarantor is released from his guarantee as long as he does not participate or consent to the extension or continuance of his guarantee for a further period. The granting of a simple guarantee which does not specify what it covers limits the guarantor’s liability and he is not considered liable for any further period the tenant remains in the premises.
In a statutory tenancy, the guarantor’s liability depends on the wording of the guarantee whether it covers the tenant so long as he possesses the premises. Statutory tenancy is different from contractual tenancy; it gives the tenant the right to remain in the premises for the time he is protected by the law. If a dispute arises, the court examines the true intention of the guarantor when the word ‘guarantor’ and his signature are simply added to the last page of the tenancy agreement. Such a guarantee, although vague, considers that the guarantor has guaranteed the whole of the tenancy and the compliance by the tenant with the terms of the tenancy agreement.
Its validity is limited for the time of the contractual tenancy and is not extended when the tenancy expires and becomes statutory. If there is a clause in a tenancy agreement providing that the tenant has the right to extend the tenancy by giving notice to the landlord, the validity of the guarantee depends on whether the tenancy will continue with the same rent or it will change. The guarantor, without any further reference, cannot be considered to have undertaken any responsibility for facts unknown to him at the time he gave his guarantee and without his will.
The addition of a term in a tenancy agreement referring to guarantee and which provides that the guarantor personally and/or jointly with the tenant guarantees the faithful compliance with the terms of the tenancy until delivery of possession of the premises to the landlord or even during the renewal of the tenancy and/or when the rent is increased, was held by case law that the guarantor’s obligation is limited and ceases upon the expiration of the contractual tenancy. The fact that the guarantor is aware that the contractual tenancy for which he gave the guarantee will become statutory does not alter his legal status.
The law gives the tenant who became statutory the right to remain in possession of the premises as long as he complies with his obligations deriving from the original tenancy agreement. The Rent Control Court has jurisdiction to hear cases against guarantors, provided the guarantee given covers the statutory tenancy. Therefore, the wording of the guarantee must be clear and strong to keep the guarantor liable during the statutory tenancy, to state that the guarantor remains responsible even when the tenancy becomes protected by law.
George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, Tel: 24 818288, [email protected]. cy, www.coucounislaw.com
