Leverage Guarantor's Personal Liability to Get Tenants to Pay Rent Arrears

The months of April and May were a nightmare for rent collections. Things may not improve dramatically in June, July, or August. And with evictions temporarily barred in so many jurisdictions, landlords may feel they have no choice but to put up with tenant defaults and negotiate the best possible settlement arrangement.

But hardball may still be an option, at least with tenants that have guarantors. Here’s a strategy you can use to leverage the guarantors’ obligation to collect the unpaid rent without resorting to eviction or litigation.

Write the Guarantor a Letter

There’s nothing hi-tech or legally intricate about this strategy for prompting delinquent tenants to pay their arrears: Just send a letter to the personal guarantor reminding him of the personal liability he faces under his guaranty should the tenant continue to be in monetary default under the lease.

Sounds obvious, right? In fact, it’s a fairly subtle collection strategy and one that’s surprisingly underutilized. But when it’s put into action, it produces results. At least that’s what the experts say, including the seasoned attorney who authored our Model Letter: Remind Guarantor of Personal Liability to Get Tenant to Pay Arrears.

The letter’s power derives more from its mere existence than what it says. Your letter, like ours, should essentially be a “courtesy” by the landlord to the guarantor that:

  • Reminds the guarantor that the guaranty agreement makes her personally responsible for the tenant’s material monetary default under the lease;
  • Notifies the guarantor that the tenant is in default;
  • Informs the guarantor of your intention to pursue all available legal remedies if the tenant doesn’t promptly cure the default (the subtle message: there’s still time to fix this);
  • Lists what those remedies include, such as garnishment, levy of bank accounts, liens, foreclosure, attorneys’ fees, etc.;
  • “Encourages” the guarantor to get the tenant to cure the default so she doesn’t have to worry about all of these nasty things;
  • Specifies that the current reminder is a “courtesy” and doesn’t obligate you to remind the guarantor of tenant defaults in the future; and
  • Concludes with a request for “immediate attention to this urgent, critical, and time-sensitive matter.”