A guarantor, sometimes called a cosigner, is someone who signs an agreement promising to pay a tenant’s rent and other lease obligations if the tenant fails to. The guarantor does not live in the unit and has no right to occupy it.
Landlords often ask for a guarantor when an applicant has limited credit history, a short work history or income that falls a little short of the requirement, such as a student or a first-time renter.
How it works
The guarantor usually signs a separate lease guaranty, or a guarantor section of the lease, that spells out what they are responsible for. A typical guaranty covers:
- Unpaid rent and late fees
- Damage beyond normal wear and tear
- Other amounts owed under the lease
- Whether the guarantee continues through renewals
Because the guarantor takes on real financial risk, landlords generally screen them like a tenant. Many require the guarantor to earn a higher multiple of rent than a tenant would, since they also have their own housing costs.
Guarantor vs co-applicant
A co-applicant lives in the unit and signs the lease as a tenant. A guarantor does not live there and only steps in if the tenant does not pay. If two people will share the home, both should be co-applicants rather than one being a guarantor.
Example
A hypothetical college student applies for a $1,400 a month apartment but has little income. The landlord’s policy asks for income of three times the rent from tenants and five times the rent from guarantors. The student’s parent applies as guarantor, shows income above $84,000 a year, passes a credit check and signs a guaranty covering the full lease term.
Why it matters for landlords
A guarantor can let you approve a promising applicant you would otherwise decline, while still protecting your rent. Apply your guarantor policy consistently to avoid fair housing problems, and check any state or local rules that limit guarantor requirements. Some guaranty enforcement rules vary by state, so have an attorney review your guaranty form. You can collect a guarantor’s signature with eSignature today; tenant screening inside TenantLoop is coming soon.
Related terms
In practice. How the term shows up day to day.
When should I ask for a guarantor?
When an applicant looks promising but has limited credit, a short work history or income just under your requirement, such as a student or first-time renter. Apply the policy the same way to every applicant.
Why do guarantors often need higher income than tenants?
Because they also pay for their own housing. Many landlords ask guarantors to earn a higher multiple of the rent than they ask of tenants.
Does a guaranty continue when the lease renews?
Only if the guaranty says so. Spell out whether it covers renewals, and have an attorney review the form, since enforcement rules vary by state.