VIC Rental guarantor query....

Australia's #1 for Law
Join 150,000 Australians every month. Ask a question, respond to a question and better understand the law today!
FREE - Join Now

Mollis

Well-Known Member
20 July 2015
32
4
124
Good evening...

I would like to have my prospective tenants add a guarantor to the tenancy but I have come across some information on this site (Guarantor in guise of co-tenant) that would seem to indicate that a guarantor isn't legally enforceable....?

On [date] I was asked to be a co-tenant on a residential tenancy agreement for the above premises. I believe this was in case the tenant defaulted with payment of rent.
I draw your attention to section 160 of the Residential Tenancies Act 2010, which states:

“(1) A landlord, landlord’s agent … must not require or receive from a tenant or other person anything other than a rental bond as security for any failure by a tenant to comply with the terms of a residential tenancy agreement.”

Section 219 of the same Act states:

“(1) A term of any … agreement … is void to the extent that it purports to exclude, limit or modify the operation of this Act or the regulations.
(2) A person must not enter into any … agreement, with the intention, either directly or indirectly, of defeating, evading or preventing the operation of this Act or the regulations.”

The maximum penalties for breaches of the above provisions are $2200.
Accordingly, it is an offence for a landlord or real estate agent to enter into an arrangement which makes a family member or friend a co-tenant on the residential tenancy agreement in order to make them liable for the debts of the other person when they have no intention of living at the premises.

I have also found this on the Victorian government website (Deposits and guarantees - renting) which seems to indicate that unless one of the two criteria below is met, I can't ask for a bond if they have a guarantor and the guarantor is only going to be liable for a maximum of one months rent.

Generally, a landlord or agent cannot ask for a guarantee as well as a bond. They can do this only when the:
  • rent is more than $350 a week, or
  • tenancy agreement states that the tenant is renting the landlord’s principal residence and the landlord will resume living there at the end of the tenancy.
A guarantee cannot be more than the equivalent of one month’s rent unless the above points apply.
In any other case, a landlord or agent can be fined if they ask for a guarantee as well as a bond.


My rent at present is $350 per week.

I would really appreciate some guidance on the best option with regards to providing some piece of mind via a guarantor.

Thanks so much in advance
 

Rod

Lawyer
LawConnect (LawTap) Verified
27 May 2014
7,726
1,056
2,894
www.hutchinsonlegal.com.au
Yep, forget having a guarantor. Take out landlord insurance instead.
 
  • Like
Reactions: Tim W and Mollis