What Is a Rent Guarantor?

What Is a Rent Guarantor?

Finding an apartment doesn't always have to involve anyone else, but there are instances where you may need someone else to step in and help you qualify. The person who does this for you is a rent guarantor. Landlords and property managers work with rent guarantors often enough that they typically already have provisions for them ready in their policies and procedures, application and lease documentation.

Definition

    A rent guarantor is someone who, although they may not live with you in a rental unit, signs the lease with you. They are called guarantors because they provide a guarantee, or promise, to your landlord or property owner that they'll cover rent payment if you do not. Guarantors are better known as co-signers.

The Need for Guarantors

    Landlords and property managers are business people. They are concerned with whether renting to you poses a financial risk. Normally, landlords and property managers determine whether you are a financial risk by looking at your credit, background and rental history, as well as your income and debts. Sometimes, however, people don't have enough credit, long enough history or income to meet the landlord or property manager's application requirements. In these instances, guarantors vouch for you and accept financial responsibility for rent and associated fees you fail to pay. Guarantors, thus, decrease the landlord or property manager's risk. Often, rent guarantors are the only way for new renters or those with a bad credit history to get into a new home.

Guarantor Requirements

    To have someone be your guarantor, he usually must follow the same application process as you do as a tenant. That means filling out a rental application, submitting an application fee, if any are charged, and presenting documents like pay stubs and letters of recommendation from previous landlords and property managers. If your guarantor's income isn't very high, his credit score should be at least 700, and his debt-to-income ratio should be low. If the guarantor has only a modest credit score, his income and debt-to-income ratio becomes more important. In most states, any adult -- that is, of legal age, which is 18 in most states -- may be a rent guarantor. The legal age requirement stands because contract laws in most jurisdictions prevent minors from entering into legal contracts without the consent of a parent or guardian.

Duration of Obligation

    A rent guarantor is obligated to fulfill your rent requirements if you default through the duration of your lease. Most leases are six months to one year, although, some landlords and property managers also use month-to-month rental agreements. Because this commits your guarantor to your finances for such a long period of time, it is imperative your guarantor ask themselves whether they would be able to make payments for you through the entire lease period before they sign with you.

Risks

    Having a guarantor often is the foot in the door when you want to rent. However, there are risks to being a guarantor. If you miss payments on rent, the late payments can show up on the guarantor's credit report, as they are legally connected to your rent agreement. If you don't pay and the guarantor also cannot, the landlord or property manager has a right to file a lawsuit against both you and the landlord to collect rent and associated fees. Any judgments issued by the court also may show up on the guarantor's credit. Make every effort to pay on time for these reasons.



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