Guarantors Put Their Signatures on the Line

Co-signers agree to fulfill terms of rental lease if primary tenant defaults

Mixed race mother and daughter using laptop together
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A guarantor co-signs a rental lease with you, taking on your financial obligations under the terms of the lease. Your guarantor won't actually occupy the apartment with you, but he or she agrees to cover the rent in the event that you cannot. This means that if you don't pay your rent on time, the landlord can go after your guarantor for the money.

Purpose of a Guarantor

Landlords want a guarantor whenever they feel a degree of uncertainty in a tenant's ability to pay rent.

Parents commonly sign on as guarantors for their college-age or newly employed children to help them get established. Lower income families and people with poor credit typically find it difficult to rent without a guarantor. Renting in high-cost markets such as New York and San Francisco makes it more likely that you will need a guarantor to secure a choice apartment. A guarantor can be a family member, an unrelated friend or colleague, or even a business securing housing for an employee.

Expectations of a Guarantor

A landlord expects a guarantor to maintain excellent credit and demonstrate an income usually at least 80 times the amount of the monthly rent. Some landlords require a guarantor who resides in the same state or metropolitan area and can be present at the lease signing. A guarantor must be willing to assume liability for property damage as well. In short, a guarantor assumes all legal liability under the terms of the lease, as if he or she were occupying the apartment with you.

Risks and Rewards of a Guarantor

Once a guarantor signs an agreement, he or she becomes legally bound to fulfill the terms of the lease, with the same level of responsibility as the primary tenant. A guarantor cannot get out of a lease without paying the same penalties and fees assessed on the primary tenant.

So if you guarantee a lease, and the primary tenant defaults, you must pay in full the remaining cost according to the terms of the lease.

If the primary tenant pays late or otherwise defaults on a lease and the landlord starts collections procedures, your credit record as the guarantor can take a hit. A default will remain on your credit report for seven years, adversely affecting your credit score. Even if a tenant fulfills the terms of the lease, being a guarantor can make it harder for you to secure a mortgage or other loan funding as potential lenders consider the commitment in relation to your other financial obligations.

Risks outweigh the rewards in the case of a guarantor. You may derive real pleasure from helping a child or close acquaintance, but always remember that guaranteeing a lease puts you on the line financially. You should not agree to be a guarantor unless you can comfortably cover the cost of the lease for the entirety of the term. It's also best to agree only to a shorter-term arrangement, such as a one-year lease, to limit your overall risk. And make sure to get all of your questions about apartment guarantors answered before you commit your signature.