What are the implications for a guarantor?

W

Wishes

Registered User
Messages
402
I have been asked to go guarantor for my son who is about to take out a lease on a retail unit.

I am apprehensive as this is his first business etc.

Could somebody please tell me the full implications of being guarantor if my sons business were to go belly up?

His lease is for two years.

Thanks.
 
Guarantor for what ? Nobody can advise you without knowing what exactly he is asking you to guarantee ...
- the rent payment for the two year period and nothing else
- any other payments - rates, water rates.
- even payment for repairs to damage caused by your son ,either negligently or deliberately.

It all depends on what the terms of the lease are.

I assume you're not being asked to cover any other debts - trading debts etc ?
 
Be very careful with this... essentially you will be liable if things go wrong. You need to understand what this entails and the full amount of the liability and whether you are willing and have the resources to cover this without putting your family home at risk.
 
As the previous poster said you need to know your full liability and determine what would happen to you, if for instance you had to pay 2 years rent?

If I was doing something like this for one of my children in the future then I would consider that I was essentially a silent partner in the venture/business and expect to have full disclosure of the business plan, income and have some control/say over expenditure and business decisions.

You could post more details on here but at the end of the day you should get legal advice before you sign any guarantee form particularly if you are not sure of the implications
 
Thanks for the feedback guys. My instinct is to run a mile.

oldnick said:
Guarantor for what ? Nobody can advise you without knowing what exactly he is asking you to guarantee ...
- the rent payment for the two year period and nothing else
- any other payments - rates, water rates.
- even payment for repairs to damage caused by your son ,either negligently or deliberately.

It all depends on what the terms of the lease are.

I assume you're not being asked to cover any other debts - trading debts etc ?
Click to expand...

Hi Oldnick,

The guarantee will entail the rent, rates, water or any damage caused. No requirement to cover trading debts.
 
Wishes, you could easily offer a limited guarantee. Say for example a guarantee for the first 6 months of the lease, or in fact the last six months.

The easiest way would be to limit your expenditure if it all went wrong. Whatever you do and agree on, make sure it is fully documented.
 
The flip side of running a mile...

"Daddy,Daddy how can you do this to me. It's such a great idea. You've really let me down.All I wanted was a couple of years guarantee. I'm not asking for a ten year guarantee. Now I'll never ralise my ambition. Thanks Dad"
 
oldnick said:
The flip side of running a mile...

"Daddy,Daddy how can you do this to me. It's such a great idea. You've really let me down.All I wanted was a couple of years guarantee. I'm not asking for a ten year guarantee. Now I'll never ralise my ambition. Thanks Dad"
Click to expand...


Yeah... if that was the answer then Daddy let him down by not teaching him how to manage his money, raise his own capital and understand the potential consequences of asking for such a guarantee.
 
This really is a case of shooting the messenger. We do not know the circumstances surrounding this post. Not all young people are reckless. Does anyone know how difficult it is for young people to have a look in with a Bank.

As a point of reminder and in the main, a large proportion of business failures in the past number of years, are from well established businesses controlled by mature adults. It is wrong to be so judgmental without the full facts been placed before one, especially on an internet forum.
 
+1

It is only a two year guarantee. If the terms are not onerous, if OP thinks his son has a reasonable chance of success and if the OP feels that in the worst circumstance he could bear any loss then it would seem almost his duty to give the guarantee.

Obviously this makes no sense financially, but the reason I wrote my seemingly flippant post (no.8) was to highlight the dilemma between hard-headed unemotioanl advice versus the powerful argument that everyone needs a helping start. If the damn banks ain't going to do it who else can?
 
You must log in or register to reply here.
Back
Top