If a relative or friend is considering being your guarantor, that person should expect to show documentation that will verify their income. Requirements vary from landlord to landlord, but there are some basic rules that apply regardless of who you're renting from.
From a landlord's perspective, it makes good business sense to look into a guarantor's finances, even though this may seem intrusive. Landlords can't just take a person's word that he can pay the monthly rent. (If they could, then the idea of a tenant needing a guarantor probably wouldn't even come up.) These are common documents required of guarantors:
- Pay stubs: Landlords commonly ask for copies of one or more recent pay stubs. If you don't have the originals, you can ask your employer for copies.
- Guarantor credit check: A landlord may prefer to run a credit check on prospective guarantors. To do this, you must provide them with your name, address, and Society Security number or Individual Taxpayer Identification Number.
Note: You should never need to provide tax returns to a landlord; your pay stubs should suffice.
Writing a Guarantor and Landlord Agreement
As a guarantor, you are technically agreeing to the same financial obligations as the lessee, so be sure to ask for a copy of the lease before signing on as a guarantor. In addition, make sure that the guarantor agreement is complete and that you understand the implications. For example, you would want to know if your property is being used as security. Some of the details that should be noted in the agreement include:
- Monthly rent
- Lease dates
- Additional apartment occupants, as applicable
Once you sign a guarantor agreement, you are on the line for paying rent if the person you're guaranteeing misses payments. It's important to not sign any agreements until the tenancy has started. That's because if anything falls through at the last minute and the person you are guaranteeing fails to start tenancy, the landlord will likely come to you demanding payment for rent and any fees involved in finding another renter for the unit.
Limiting the Guarantor Agreement
If you're unhappy with the proposed agreement, you can express your concern to the landlord and ask if you can limit your guarantee as a guarantor to a specific amount of time, such as the period of the tenancy, or for a specific amount of money. However, this could result in your friend or family member being denied an apartment if the landlord doesn't feel that the agreement provides enough security. If your friend is able to rent the apartment and then misses a payment, you may still receive collection calls or be sued for the arrears as a guarantor, even with a limited agreement.
While being a guarantor does come with some financial risk, it can be a good option if you are financially able to meet the obligation and you trust the person you are guaranteeing.