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Hello All-

Have not been around this board in awhile, however I figured this would be a good place to get some advice-

In March I agreed to be guarantor for my niece who was planning on attending college this fall. She signed a lease with University House in Fla and planned on moving in this August. Needless to say the plans fell through and she was unable to attend. She is currently living with her mother (my sister) in VA. The issue now is UH is looking for August rent money (577.00/mo) and in a couple days September. (rent is due the 1st). They really have no policies regarding students who cancel or are unable to attend. The only thing they can do is offer it as a "relet" to walkins, or my niece can post it herself online. If there are no takers she (and myself as guarantor) will be on the hook for twelve months of rent. (6924.00). What affect will this have on my credit (which is excellent at the moment) if UH decides to send this to collections? I suggested my sister try for a home equity loan/line of credit to make payments to UH but she wasn't sure is she would qualify. I have considered taking out a personal loan and having my sister and niece pay me back, but am a bit hesitatnt at the moment and realize that would impact my cerdit score as well. Any suggestions would be greatly appreciated.

Thanks in advance
Kevin
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No. of Recommendations: 6
In March I agreed to be guarantor for my niece

It is because of this that you are now on the hook. Did you not understand that being a guarantor would make you completely responsible for this should there be a default?

The only thing they can do is offer it as a "relet" to walkins, or my niece can post it herself online. If there are no takers she (and myself as guarantor) will be on the hook for twelve months of rent. (6924.00). What affect will this have on my credit (which is excellent at the moment) if UH decides to send this to collections? I suggested my sister try for a home equity loan/line of credit to make payments to UH but she wasn't sure is she would qualify. I have considered taking out a personal loan and having my sister and niece pay me back, but am a bit hesitatnt at the moment and realize that would impact my cerdit score as well.

This is your debt since you signed as guarantor, and so it will have a detrimental effect on your credit if it goes to collections. Is anyone paying that rent now, either you, your niece, or your sister? Someone needs to be paying it so that it does not go to collection.

Why didn't your sister guarantee the lease for her daughter instead of you? It seems to me if it was because she could not afford to do that, she won't be in any better position to do it now, and she is not on the hook for any of this since you are the one who signed.

Do you really need a personal loan for this? It seems to me that if you can make the payments for the personal loan, you may have the cash flow to just pay the monthly rent. That would also allow time to find another tenant to take over, and get you off the hook of owing more months of rent.
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You guaranteed the rent. Since your niece is unwilling to pay, it is your responsibility.

They really have no policies regarding students who cancel or are unable to attend. The only thing they can do is offer it as a "relet" to walkins, or my niece can post it herself online.

They have a policy, you just don't like it. You signed a lease, and you are responsible. It doesn't matter that your niece decided not to attend.

Pay August and September and advertise for someone to take over the lease. Your niece should repay you, and that you need to work out with her.
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In March I agreed to be guarantor for my niece who was planning on attending college this fall.

In other words - you agreed to take on this obligation.

She signed a lease with University House in Fla and planned on moving in this August.

As her guarantor, this is your lease, too, just as much as if you were moving in.

Needless to say the plans fell through and she was unable to attend.

When was it determined that she would not be able to attend? Why did this discussion not occur at that point?

She is currently living with her mother (my sister) in VA.

From the school's standpoint, it doesn't really matter where she chooses to live. She signed a lease and has rented the living space at the school. The choice that she made to not attend, and therefore to not live there, is just that, a choice. It doesn't let her (or you as her guarantor) out of the legal obligation to pay the rent.

The issue now is UH is looking for August rent money (577.00/mo) and in a couple days September. (rent is due the 1st).

Which, according to the terms of the lease, they appear to be legally entitled to.

If you don't already have a copy of the lease, you need to get one, and see what the terms are.

They really have no policies regarding students who cancel or are unable to attend. The only thing they can do is offer it as a "relet" to walkins, or my niece can post it herself online. If there are no takers she (and myself as guarantor) will be on the hook for twelve months of rent. (6924.00).

They don't need to have a policy. She signed the lease, which obligated her to pay the rent for the entire year. As her guarantor, you agreed to pay the obligation if she could not/did not. Again, you need to check the lease to confirm, but from what you've described, you are on the hook until someone else agrees to rent the space.

What affect will this have on my credit (which is excellent at the moment) if UH decides to send this to collections?

A collections account will likely significantly impact your credit score. One time I was buying a house, I had a collections account incorrectly placed on my report (same last name, different first name, had lived in the same small city). It dropped my score nearly 100 points. I had good enough credit that I still qualified for the mortgage, even with the account on my report.

I suggested my sister try for a home equity loan/line of credit to make payments to UH but she wasn't sure is she would qualify.

Your sister is not legally on the hook to make any payments. You are. If your sister didn't qualify to sign as your niece's guarantor (presumably your niece approached her mother with this request prior to approaching her uncle), then I would agree, she is unlikely to qualify to get a home equity line of credit, as these days, HELOCs require pretty decent credit ratings.

I have considered taking out a personal loan and having my sister and niece pay me back, but am a bit hesitatnt at the moment and realize that would impact my cerdit score as well.

Taking out a loan would have significantly less impact on your credit score than having a collections account. It may actually even improve your score assuming that you make timely payments.

Any suggestions would be greatly appreciated.

1. At this point, you had better make arrangements to get the August rent paid TODAY, as you are already 29 days delinquent on that obligation. Come September 1st, UH can report the account as being 30 days delinquent on both credit reports - yours and your niece's.

2. You and/or your niece need to be proactive about getting the space leased again. When it is re-leased, you need to understand if you would have any further obligation - for instance, if the new tenant chooses to not live in the space during June and July, are you still responsible for the rent for those months? Are you responsible for any damage the new tenant causes? etc.

3. If you can't afford to pay the $577 each month yourself, without taking out a personal loan, it was a big mistake for you to agree to be her guarantor. Let that be a lesson to you, if in the future, you are asked to be a guarantor or co-signer for any other obligation. As the guarantor or co-signer, you are agreeing to make the payments, just as much as the borrower. If it would cause a hardship for you to make the payments, you should not agree to be the guarantor/co-signer.

4. You need to have a discussion with your niece about how the choices she has made have impacted you, and what she is going to do to make things right. In the mean time, if you don't want your credit score impacted, you need to pay the obligation, as you agreed to.

AJ
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aj485:

"When was it determined that she would not be able to attend? Why did this discussion not occur at that point?"

This. How long was this unattended? And why?

"1. At this point, you had better make arrangements to get the August rent paid TODAY, as you are already 29 days delinquent on that obligation. Come September 1st, UH can report the account as being 30 days delinquent on both credit reports - yours and your niece's.

2. You and/or your niece need to be proactive about getting the space leased again. When it is re-leased, you need to understand if you would have any further obligation - for instance, if the new tenant chooses to not live in the space during June and July, are you still responsible for the rent for those months? Are you responsible for any damage the new tenant causes? etc.

3. If you can't afford to pay the $577 each month yourself, without taking out a personal loan, it was a big mistake for you to agree to be her guarantor. Let that be a lesson to you, if in the future, you are asked to be a guarantor or co-signer for any other obligation. As the guarantor or co-signer, you are agreeing to make the payments, just as much as the borrower. If it would cause a hardship for you to make the payments, you should not agree to be the guarantor/co-signer.

4. You need to have a discussion with your niece about how the choices she has made have impacted you, and what she is going to do to make things right. In the mean time, if you don't want your credit score impacted, you need to pay the obligation, as you agreed to."


I mostly agree with aj.

You did not mention the school, and I have no idea whether Univeristy House is part of the school or a private owner.

What I would note, is that if UH is a private party, then Florida law would likely govern a lease, and might impose on the Landlord a duty to mitigate damages, but even if it does so, it is not a panacea and may not fix the problem. I am not a Florida lawyer but I see many leases that provide that as long as landlord lists the space with its broker it is fine, and that the Landlord owes no duty to lease yoru space first over other space that the Landlord migh have avialble for lease.

I would strongly reiterate aj's points 1 and 2 above, and then suggest that if you want more specific advice, you find a Florida lawyer.

I cannot imagine that having a collection on your account would help your credit rating and find it surprising to beileve that a long youw ould obtain would be cheaper than simply paying the rent monthly.

You should also be conerend about late fees, and other possible consequences for having been late or continuing to be later with montly payments. I see lots of leases that provdide for a 5% late fee if the rent is not paid within 3 (or 5) days of when due, without any required notice that rent was unpaid.

And it woudl nto surprise me if that lease obligated you (your niece and you) to pay the Landlord's legal fees or other costs of collection.

Regards, JAFO

Disclaimer

Yes, I am a lawyer (not in Florida), BUT THIS IS NOT LEGAL ADVICE; it is only general information. NO CLIENT RELATIONSHIP IS INTENDED TO BE CREATED, NOR IS ANY SUCH RELATIONSHIP SO CREATED. FOR SPECIFIC LEGAL ADVICE YOU SHOULD TALK TO A LAWYER IN YOUR AREA.
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<<What I would note, is that if UH is a private party, then Florida law would likely govern a lease, and might impose on the Landlord a duty to mitigate damages, but even if it does so, it is not a panacea and may not fix the problem. I am not a Florida lawyer but I see many leases that provide that as long as landlord lists the space with its broker it is fine, and that the Landlord owes no duty to lease yoru space first over other space that the Landlord migh have avialble for lease.

I would strongly reiterate aj's points 1 and 2 above, and then suggest that if you want more specific advice, you find a Florida lawyer.
>>


I think JAFO makes some very important points above.

I'd be getting on the phone to the college housing office and talking turkey to them about re renting this space.

The duty to mitigate damages is a pretty general feature of most contracts --- I'd start by reading the college's housing contract carefully to see what it might say about this kind of issue, which must be an ever day fact of life for college housing staff.


<<I see many leases that provide that as long as landlord lists the space with its broker it is fine, and that the Landlord owes no duty to lease yoru space >>



Good example of why you need to read the housing contract with care.

Do you even HAVE a copy of the contract? If you don't, who does?


WHY did your niece decide not to attend this school as planned?



Seattle Pioneer
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I Googled up the lease agreement that is probably what was signed. It has the following provision on re leasing:

C. Relet Policy
The Lease does not allow you to cancel the Lease early. There are two ways you can
Relet your apartment provided you are not in default under the Lease.
Assisted Relet. If you need our assistance in locating a new resident to take over
the Lease, you can complete a Relet and Release Acknowledgement form and
pay a reletting fee equal to 85% of one month’s rent. As stated in Section 11 of
the Lease, the reletting charge is an agreed-to, liquidated amount, covering only
part of our damages - that is, our time, effort, and expense in finding and
processing a replacement. Management has an obligation to give priority to filling
vacant bed spaces/units prior to matching potential customers to the relet list.
Unassisted Relet. If you have someone willing to take over your bed space, you
can complete a Relet and Release Acknowledgement form and pay a reletting
fee of $200.
In either case, the new resident and new guarantor will need to be approved by
us. After the new resident has been approved, the new resident will sign a new
lease and the new resident’s guarantor will sign the Guaranty Agreement. Though
the apartment will have been prepared before the new resident’s arrival, the new
resident must inspect the apartment, note all damages on the move-in condition
form and accept the apartment. The new resident will pay the security deposit,
application fee, prepaid rent, and all other applicable fees and deposits.



Seattle Pioneer
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