What is a guarantor?
A guarantor is a person who agrees to be equally responsible for making payments in a debt agreement. The guarantor intervenes to help the primary applicant who does not have a strong financial position to obtain approval on their own. Regarding an apartment, the guarantor uses their strong credit history and higher income to help the tenant get approved for a lease. In addition to providing financial information, the guarantor legally agrees to take on the financial responsibility of the tenant under the lease agreement.
How does apartment guaranty work?
The procedures for apartment guaranty are similar to applying for a credit card or loan, as it requires sufficient income and credit history. Applicants who do not meet the qualifications – for example, do not earn enough money or have a troubled credit history – may be able to get the lease with a guarantor who is over 18 and meets the qualifications. The guarantor provides information about their income, agrees to a credit check, and signs an agreement that outlines their responsibility for paying the rent.
Your responsibilities as a guarantor on a lease
Guarantors are responsible for paying the monthly rent for the duration of the lease, generally any damages to the property, cleaning, associated fees, and repair costs in the event that the apartment resident fails to pay these debts. This means that if the tenant defaults on any rent payments, the landlord can collect the amount due and any late fees from you.
Guarantor vs. cosigner: What’s the difference?
A guarantor is not the only option to help someone secure an apartment. Another option – although equally risky – is to be a cosigner.
The guarantor is a joint responsible party for paying the monthly rent and can be a named tenant in the lease. The cosigner, on the other hand, is only responsible for paying the rent when the primary tenant fails to make payments. The cosigner will not be named in the lease and has no rights to the property.
In both cases, when signing to be a cosigner or guarantor, a strong credit history and high income are considered. However, there may be additional requirements for the cosigner, including higher income requirements and proof of income and residency in the state or a particular geographic area, depending on the state. In New York, for example, landlords typically require that the cosigner’s annual income be at least 80 times the monthly rent. This means that if the monthly rent of the apartment is $3000, the cosigner must be able to prove that their annual income is at least $240,000.
Should you be a guarantor on a lease?
When you are a guarantor on a lease, you agree to be responsible for making payments, whether you live there or not. Before you agree to be a guarantor, here are some things to consider.
Your relationship to the tenant: Being a guarantor for an adult child may seem more appealing and acceptable to some people than being a guarantor for a friend or another relative. Level of trust: Consider what you already know about the tenant’s job stability and financial habits. Being a guarantor for someone irresponsible can mean that you may have to pay often. Other roommates: Since you could be held responsible for the actions of other roommates, this may influence your decision. Financial capability: When you are a guarantor, you are essentially agreeing to pay the monthly rent. See if your personal finances would be affected if you had to cover the full rent for several months.
Conclusion
Being a guarantor for an apartment is a risky undertaking, but the risks can be manageable if you have a close relationship with the tenant and trust their financial situation (and yours too). Remember that any unpaid bills – whether due to late rent payments or unpaid damages – can impact your credit score. If the tenant stops paying rent, gets evicted, or the landlord sends unpaid bills to a debt collection agency, the guarantor’s credit can be affected.
Questions
Commonly Asked Questions
Who can be a guarantor on a lease for an apartment?
Anyone who meets the qualifications of the landlord can be a guarantor on the apartment lease. Requirements often include a high credit score and a solid rental or mortgage history, as well as relatively sufficient income for the monthly rent. The guarantor can be a parent, relative, or friend of the tenant.
How old do you have to be to be a guarantor on a lease for an apartment?
In most states, you must be at least eighteen years old to sign a contract, which includes being a guarantor for the apartment. Even if you meet all other requirements to be a guarantor, the contract will not be valid if you have not reached the age of majority in your state.
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Sources:
Tenant Resource Center. “Tips for Cosigners.”
NYC Government. “Tenants’ Rights Guide.” Page 10.
Virginia Department of Behavioral Health & Developmental Services. “FAQs About Guardianship and Leasing Apartments for Landlords.”
Reliance Reality. “Renter’s Guide.”
Idaho Office of the Attorney General. “Landlord and Tenant Manual.”
Wisconsin Government. “What You Should Know About Wisconsin Law: Your Legal Rights and Responsibilities.” Page 10.
Source: https://www.thebalancemoney.com/should-you-co-sign-on-an-apartment-5197845
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