Getting a parent to go guarantor for a teenage tenant can make things a lot easier when the proverbial hits the fan.
In this article about a teenage tenant, Glenn Morris explains how having a parent act as Guarantor can save your bacon if anything goes wrong. The Residential Tenancies Act allows for a parent Guarantor in the recent amendments. The best way to achieve this is to add the parent in your tenancy agreement as a tenant. The DBH accepts this and it offers clear evidence of intention at the start of the tenancy. Read on to find out about Glenn’s recent dealings with this issue!We all know that someone at the age of sixteen is still half a child and can be a problem as a tenant. However sometimes I ignore my instinct and think with my heart. I recently let a flat to a young sixteen year old solo mother with a seven month old baby. The recent RTA changes have made things much better for those landlords who enjoy the challenge of letting to tenants under the age of eighteen.
Section 14 of the RTA modifies the Minors Contracts Act of 1969. The MCA specifies that contracts entered into by minors can not be enforced. In our world that could mean you might not be able to evict the tenant or collect a debt. However the MCA recognises that such a blanket ban on responsibility can be to the detriment of the minor’s well being so they have inserted this clause. “The discretion (to permit enforcement) could only be exercised where the Court was satisfied that the contract was fair and reasonable.” The MCA has provision for a judicial review of the contract. In landlords cases this means you can apply to the tenancy tribunal to have a tenancy contract ratified and after that time it presumably is considered fully enforceable. I have never taken such a case but once sought tribunal authority for another similar pre tribunal approval clause. I was very disappointed in that ruling because what I was asking for was declined, and the tenancy did turn bad as predicted. So naturally I am still rather cynical about obtaining pre judicial common sense and the security blanket that we all crave for.
The RTA modifies the MCA by saying if you enter the tenancy when under 18 but later on turn 18 then the protection offered by the MCA no longer applies. Also if the tenant is married or in a civil union under the age they are not covered either.
The recent amendments to the RTA permitted guarantors for the first time. I have asked high and low in the DBH and all the staff claim ignorance about guarantors and how best to incorporate them into agreements. I have sourced some complex looking guarantor agreements but find the best way is to keep it simple. On the tenancy agreement along side the names of the tenant I enter Mr Loving Parent as guarantor.
I have tested this process in the tenancy tribunal making the application the same way just adding the name of the guarantor as one of the tenants but with the words “as guarantor” along side that name. The court seems to happily accept the concept. As might be expected every single tenancy granted that had a guarantor has had problems. However having that magic word guarantor has had a wonderful outcome. In every case where there was a guarantor the father figure has made the young scallywags meet their obligations and so far I have not needed to enforce a debt. So as the saying goes it has been a win win outcome. The young people have been given a chance and I have not suffered a financial loss. However like many engagements with young people there has been a fair amount of work and at times frustration by having to drag a child into an adult’s world. Have you ever noticed how children rush back to their mother’s skirts when the boogie man comes calling? This after all is surely the difference between being a child and an adult. How many of us have heard the phrase from a young hopeful application. I am a very mature 16 year old. I even had a young female (not a lady) claim at a debt enforcement hearing that she did not think she should pay the debt because she was under 18 at the time of the tenancy. I did collect 100% of the debt of that ex tenant. The court registrar was not at all interested in hearing that sort of sob story. The presumably free, young lawyer she brought along with her was completely out of his depth. The win did more than help my clients bank account it still warms my heart. Surely I must be permitted to say justice is mine.
Oh incidentally the 16 year old troll missed her second week’s rent. Excuse… “I did not understand” she says. So it was another warning letter and threats of tribunal. She paid the third week.
Epilogue
Last month I wrote about the young 16 year old mum that I had given a tenancy chance. Well unfortunately after I got back from holiday one of the first duties was to appear in tribunal re her case. She was evicted after a 6 week tenancy. Granny the guarantor paid up the small difference between the bond and the judgment debt. We will be seeking another $400 off her also for the clean up. It is pretty hard to hide or run when you live at Oakwood’s retirement village. I wonder if either of them has learnt anything. Incidentally this week I have been contacted by a special unit of WINZ that specializes in managing young under 18 year old mums. I will tell you more about this new amazing service soon. Yes this Government is doing some good stuff out there. We just need to know how to connect into it.
Glenn Morris is the owner of Nelson property management company, “Glenn’s Vacancies”, managing residential and commercial investments. He is the current secretary of the Nelson Property Investors Association. He was active in the review of the RTA and is a well-known figure in the property investment community. He has a reputation for effectively managing difficult tenancies.”
