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Rent Guarantee Agreement Template for Malaysia

This document is a legally binding Rent Guarantee Agreement governed by Malaysian law, primarily under the Contracts Act 1950 and related legislation. It establishes a third-party guarantee for a tenant's rental obligations, where the guarantor commits to fulfilling the tenant's financial obligations under a tenancy agreement if the tenant defaults. The agreement includes comprehensive provisions for the scope of the guarantee, enforcement mechanisms, and the rights and obligations of all parties involved, while ensuring compliance with Malaysian legal requirements for guarantee agreements and property transactions.

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What is a Rent Guarantee Agreement?

The Rent Guarantee Agreement is a crucial document in Malaysian property leasing arrangements, providing landlords with additional security for their rental income. This document is typically used when a landlord requires extra assurance of rent payment, such as in cases of corporate leases, student rentals, or when tenants have limited credit history. The agreement must comply with Malaysian law, particularly the Contracts Act 1950, National Land Code 1965, and other relevant legislation. It outlines the guarantor's obligations to cover rent payments and other tenant obligations in case of default, specifies the duration and scope of the guarantee, and includes enforcement provisions. The document is essential for risk management in property leasing and often required by institutional landlords or in high-value rental arrangements.

What sections should be included in a Rent Guarantee Agreement?

1. Parties: Identifies the guarantor, landlord (beneficiary of the guarantee), and tenant (principal debtor)

2. Background: Recitals explaining the context of the tenancy agreement and the need for the guarantee

3. Definitions: Defines key terms used throughout the agreement, including 'Guaranteed Obligations', 'Tenancy Agreement', and 'Rent'

4. Guarantee and Indemnity: Core section detailing the guarantee obligations and indemnity provisions

5. Scope of Guarantee: Specifies exactly what obligations are covered by the guarantee, including rent, damages, and other tenant obligations

6. Duration: Specifies the term of the guarantee, including any continuation or termination provisions

7. Guarantor's Obligations: Details specific obligations of the guarantor, including payment terms and notification requirements

8. Preservation of Rights: Maintains the landlord's rights in various circumstances, such as tenant insolvency or variations to the tenancy

9. Representations and Warranties: Guarantor's confirmations about their capacity and authority to provide the guarantee

10. Enforcement: Procedures and rights for enforcing the guarantee

11. Notices: Requirements for serving notices under the agreement

12. Governing Law and Jurisdiction: Confirms Malaysian law applies and specifies jurisdiction for disputes

What sections are optional to include in a Rent Guarantee Agreement?

1. Security: Include when the guarantee is secured by specific assets or collateral

2. Multiple Guarantors: Required when there is more than one guarantor, specifying joint and several liability

3. Guarantee Limit: Include when the guarantee is capped at a specific amount

4. Step-In Rights: Optional provisions allowing guarantor to take over tenancy in case of tenant default

5. Assignment: Include when either party needs the right to assign the guarantee

6. Early Termination Rights: Optional provisions for early termination of the guarantee under specific circumstances

What schedules should be included in a Rent Guarantee Agreement?

1. Schedule 1 - The Tenancy Agreement: Copy or key details of the underlying tenancy agreement being guaranteed

2. Schedule 2 - Guaranteed Obligations: Detailed list of all obligations covered by the guarantee

3. Schedule 3 - Property Details: Details of the rental property including address and description

4. Schedule 4 - Guarantee Cap Calculation (if applicable): Formula or method for calculating any cap on the guarantee amount

5. Appendix A - Form of Demand: Standard form for making demands under the guarantee

6. Appendix B - Guarantor's Details: Complete details of guarantor including financial information if relevant

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Malaysia

Document Type

Guarantee Agreement

Sector

Banking

Cost

Free to use

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