What are sureties and guarantees?

What are sureties and guarantees?

"I'm 18 and planning to buy a flat on my own. I've heard about rent guarantees, sureties and deposits: what are the differences and what can I expect?

A.; Geneva

First and foremost, a distinction needs to be made between two different institutions in the context of tenancy law: sureties and securities.

The security provided by the tenant under article 257 e of the Swiss Code of Obligations (CO) corresponds to the amount paid to a bank into a blocked account. The purpose of this sum of money is to protect the landlord from the risk of the tenant failing to pay the rent or causing damage to the rented property, forcing the landlord to spend money on repairing the property. It is not compulsory to set up such a guarantee, but if the lessor requires it, the amount may under no circumstances exceed the total sum of three months' rent. As long as the lease lasts, the tenant cannot set off the amount he has deposited as security against the sums he owes the landlord, and the amount deposited can only be released in four circumstances: if the parties have agreed to release it, if there is an enforceable judgement ordering the release, following the expiry of a period of one year after the end of the lease, or if an enforceable summons to pay is issued against the tenant.

A surety is an independent mechanism that can be used in the context of tenancy law, for example by parents who want to help their child rent his or her first flat if the landlord does not consider the child to be sufficiently solvent. This is a contract whereby a person, the guarantor, undertakes to the creditor to guarantee payment of the debt contracted by a third party, the principal debtor (art. 492 para. 1 CO). Under tenancy law, the principal debtor is the tenant and the creditor is the landlord. The expression "to stand surety" is therefore a poor translation of the legal reality, which is actually to "stand surety". The guarantee contract is subject to strict formal conditions, so that the guarantor is aware of the risk of having to assume the debts of the person being guaranteed. The guarantor must draw up a written declaration containing a numerical indication, in the deed itself, of the total amount to which he has committed himself.

You should be aware that it is possible to be insured by a surety company instead of providing security. However, the landlord is not legally obliged to do this, and may refuse this guarantee system. If the landlord accepts, the advantage for the tenant is that he does not have to pay a large sum all at once, which will be replaced by an annual contribution. However, unlike bank interest on the amount deposited, this cannot be recovered.