What Happens if I Can't Pay for a Lease I Cosigned?
Cosigning a lease agreement isn't a bad gesture, as long as you understand the requirements of a cosigner, and you're agreeable to paying the lease if the primary lease signee can't pay. But if you can't pay for a lease that you've cosigned, the financial and legal consequences are severe.
Process of Cosigning
Cosigners are often asked to sign a lease -- or any other loan or agreement -- when the primary signee can't qualify on his own. Apartment managers or house landlords review financial and credit information before giving someone the keys to a unit. If the applicant doesn't earn enough to afford the rent, has a lot of existing debts or has a low credit score, the landlord may deny the application and suggest adding a cosigner to the lease contract. A good cosigner includes someone with a good credit history who can pay for the lease if the primary renter can't.
Assuming Responsibility
The primary renter is ultimately responsible for the rent. But if the rental date passes, and this person hasn't submitted a payment, the landlord may call the cosigner after a few days to request a rental payment. Cosigners cannot refuse to make the rental payment. Lease agreements are legally binding, and by signing his name to the agreement, the cosigner assumes this responsibility and agrees to pay in the event of lateness or default by the primary renter.
Filing a Lawsuit
Landlords who file a lawsuit for non-payment of rent or breach of contract not only include the primary renter in the lawsuit, he can also include the cosigner in the lawsuit. Both parties are responsible for the rent payments; thus, the judgment may require both parties to make back rent payments and future rent payments if they broke the lease agreement early.
Credit Report
Oftentimes, landlords only report apartment leases on credit reports if a renter defaults. Cosigning a lease and refusing to pay the rent if the primary renter defaults can harm your credit history. The judge in the lawsuit may place a credit judgment on your report after the case. The landlord may then send an update to the credit bureaus and notify them of your breach of contract. Both actions can stay on your report for seven years, damage your overall credit rating and prevent approval of future apartment or loan applications.
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