Having a co-signer or guarantor sign the rental agreement alongside the tenants can be useful, if a prospective tenant doesn’t qualify on their own after reviewing their rental application. But many prospective tenants (and guarantors, for that matter) fail to understand all that may be involved.
Below are some frequently asked questions regarding lease agreement co-signers/guarantors.
Q: Do the terms “guarantor” and “cosigner” refer to the same role?
A: Yes, landlords and property managers use the words guarantor and cosigner interchangeably.
Q: What exactly is a guarantor/cosigner?
A: A guarantor is a person who will sign the rental agreement along with a tenant and will then have the same financial obligations as the tenant. The difference is that the guarantor will not actually live in the rental unit. Although (s)he will not become an occupant, (s)he will be financially liable for the obligations of the lease agreement just as the tenant is.
Q: Who are the people that usually sign on as a guarantor?
A: Most often the prospective tenant’s parent or guardian will sign the rental agreement as the guarantor. If a parent is not able or willing to sign as a guarantor or co-signer, sometimes another relative or even a close friend may do so (at the discretion of the landlord).
Q: What is the specific responsibility of a potential guarantor?
A: A potential guarantor will be bound by the same terms of the lease agreement as the tenant. This includes being responsible for the rent should the tenant fail to pay it. The rent is not the only responsibility; a guarantor can be held liable for whatever a tenant is liable for. This could be physical damages and not abiding by all the rules of the rental agreement. If the landlord files for eviction, the court action will be against both the tenant and the co-signer, as would any resulting judgment. If this happens, this could adversely affect the credit of the guarantor.
Q: What paperwork will be collected from the guarantor?
A: It depends on the landlord, but most often, a guarantor will be asked to provide all of the same documentation as the prospective tenant including income verification and employment verification. Landlords often run tenant screening reports (such as credit checks and criminal history reports) on the guarantor as well as the tenants, to verify their suitability to guarantee on the tenants’ behalf. Toward that end, the guarantor would have to complete and sign a rental application which includes their social security number, address, date of birth and permission to run the tenant screening reports.
Although this may seem excessive by some, if the guarantor is going to be liable for the rent and the provisions spelled out in the lease, so it’s equally important that the landlord verify the guarantor’s ability and likelihood to pay. If the guarantor is reluctant to provide this information, landlords would be wise to look elsewhere for a tenant.
Q: Is there any reason a guarantor would get a copy of the tenant’s screening report?
A: The landlord would not provide such a report. Credit reporting laws remain extremely strict on confidentiality. Should the guarantor or co-signer want the tenant’s information, this would be arranged between the tenant and his co-signer.
Q: Does a guarantor have to live in the same state as the tenant?
A: Not necessarily – this decision is at the landlord’s discretion. However it’s worth noting that collecting money from out-of-state residents can prove extremely difficult and expensive.
As a final note, it’s worth reiterating that in all tenant screening situations, landlords and property managers must adhere to Fair Housing Laws.