Accepting Co-signers For Lease Agreements

By E-Renter Tenant Screening
Posted on July 24, 2006 under Landlord and Tenant FAQs | icon: commentBe the First to Comment

A lease agreement with one tenant is tricky enough, and by adding a co-signer a landlord can make the situation more complex than is necessary. But, if you have a tenant who lacks a credit history or has a dodgy one, a co-signer with a good track record can assure you financial peace of mind.

Similar to a co-signer on a bank loan, a lease co-signer agrees to pay the rent, if and when your tenant cannot make the payments. In many instances, such as a young tenant without an established credit history, either parents or friends may be required to co-sign their lease.

Or else, a co-signer may be required if a landlord wishes the tenant’s rental amount to be less than a certain percentage of his / her entire income. Some landlords ask for co-signers, as a way of ensuring the tenant is living well within his / her means and can meet their rental payments each month. If on the whole, a landlord is satisfied with his / her tenant, but the latter’s income is less than the satisfactory percentage requirement, it is a good idea to ask the tenant to add a co-signer to their lease , as surety the rent will be paid throughout the lease term.

Consider the following before instituting a co-signer lease policy:

  1. A Complete Analysis of Co-signer’s Financial Status. A landlord needs to ensure a co-signer will be able to live up to the financial guarantees provided by him / her in the lease agreement.
  2. Co-signer Must Be Easily Contactable. In case, a tenant is unable to meet his / her rental obligations, a landlord should be able to get in touch with the lease co-signer to be able to collect rent owed. It is a good ideal to discuss options and procedures with the lease co-signer before the lease is actually signed.
  3. A Co-signer Must Understand the Implications Of Signing The Lease. It is essential a co-signer understands the terms and what is entailed when he / she signs the lease. Not every co-signer will be willing to take on the responsibility of paying the rent plus late fees if a tenant is unable to do so. A landlord should discuss the matter with both tenant and co-signer, making clear everyone understands what is expected of them. It is possible to work out an agreement where a co-signer is liable for only part of the lease term, till such time as the tenant proves he / she is reliably trustworthy and can meet the rental payments on his / her own.
  4. More Than One Co-signer. Sometimes, a tenant may wish to add on more than one co-signer to the lease. This lessens the risk and the obligation of meeting the lease terms, is shared amongst responsible people. It is a good option for a young tenant, who is just starting out and has not established a credit history.

But, having co-signers for lease agreements is not the only solution to protecting oneself against unpaid rent. A landlord has the option to ask a tenant to pay rent in advance for the entire term or part of the term, or even ask for a large security deposit amount.

Permitting a tenant to have co-signers is a serious consideration, and all points should be weighed carefully before deciding on it as the final option. Discuss the implications with your lawyer to ensure you are on firm legal ground before instituting any new lease policies.

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