How to Deal with Cosigners on a Residential Rental Lease

By E-Renter Tenant Screening
Posted on May 25, 2010 under Landlord Tips, Tenant Screening & Background Checks | icon: commentBe the First to Comment

iStock_000002437760XSmall-300x199Every landlord has his or her way of dealing with potential tenants who have less than stellar credit histories, or whose income is lower than the required minimum for a rental property. Many just outright reject the tenant applicant and move on until they find a better fit. Others take into consideration the tenant applicant’s work and rental history and character, and try to work with them. Requiring a larger security deposit is one way a landlord might feel better about a lower-quality tenant.

What about college-town landlords? They routinely deal with young students who’ve yet to establish credit histories. How do they get around it?

For many a landlord’s anxiety over young tenants or tenants with poor credit scores, co- signers are the answer. Requiring a co-signer is your prerogative; however, dealing with co-signers brings its own set of potential problems.

Here are a few tips for dealing with co-signers on rental property leases:

  • Clearly state your expectations and the co-signers’ responsibilities in the lease. If the co-signer is liable for the rent when the tenant doesn’t pay, establish a method to collect the rent from the co-signer. Include time limits and eviction action in the case of non-payment of rent.
  • Know your co-signer. You must be comfortable that the co-signer is financially capable of abiding by the terms of the lease, including paying the rent in the event the tenant does not. Obtain permission from the co-signer to run a background screening credit check to be absolutely sure your co-signer meets your qualifications.
  • Obtain at least two ways to reach the co-signer. You need to be able to get in touch with them immediately upon non-payment of rent.
  • Meet with the co-signers, if possible. If you cannot meet in person, try to have a three-way call with the tenant and co-signer. Go over the terms of the lease with both parties.
  • Don’t allow the tenant to move in without a signed lease, first month’s rent, and security deposit. Do not allow a stick of furniture in your property until you have received the co-signer’s signature on the lease. Preferably, notarized!

It’s not necessarily a bad thing to require a co-signer on a lease—especially if you’re having trouble filling a rental vacancy. Just be thorough, keep good records, and check the co-signer’s credit history before approving the application.

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