Ideally, a potential tenant should have a good rental and credit history and is financially stable to have a good chance of getting the landlord's approval. However, if the applicant does not meet any of these general requirements, a rent guarantor may help seal the deal.
So, who is a guarantor?
A guarantor is a person who signs the lease with the applicant but typically does not occupy the property with the tenant. That means the guarantor only shares the legal responsibilities with the tenant, including the financial obligations.
What conditions necessitate a guarantor?
As a landlord, he would want responsible and financially capable tenants to occupy his property. However, ascertaining if an applicant is qualified can be difficult, and one way to reduce the risks on the part of the landlord is by having a guarantor.
One of the most common reasons why a guarantor will be needed in a lease agreement is when the applicant's monthly income is not enough to cover the added rental expense. Ideally, a third of the applicant's monthly income should be enough to meet the rental obligations. Otherwise, the landlord may ask the applicant to find a guarantor.
Another reason why a guarantor may be required is if the applicant has a weak or little credit history. Most landlords would require that the person applying as a tenant have a good credit history - able to pay his minimum due on his credit accounts.
Also, if the applicant has a poor rental history, which may include late rent records and evictions can cause the landlord to require a guarantor to sign with the applicant.
Who can be your lease guarantor?
For college students, the parents are the ones who usually act as guarantors. For older adults who already have credit and financial history, they tap other relatives, a friend, a colleague, or a business partner to sign as a lease guarantor.
Read also: How to Properly Break a Lease
Some government agencies and non-profit organizations may also sign as a guarantor for low-income families.
Don't confuse a guarantor with a co-signer
Guarantors and co-signers are often used interchangeably, but they don't necessarily mean the same thing. A guarantor will only be responsible for the rental payment once the tenant is unable to meet his obligation.
A co-signer, on the other hand, shares equal responsibility when it comes to the monthly rental payment. Depending on the agreement, a co-signer may also have the right to live in the property.
What will be required from your prospective guarantor
The documentation that will be required from your prospective guarantor may vary depending on the landlord but will typically involve pay stubs and a credit check. Some landlords may also require that the guarantor/s live within the area or the state. Such a requirement adds the assurance that the landlord will able to seek a secondary payment if the renter fails to fulfill his obligations.
The guarantor needs to fully understand what is stated on the lease guarantor agreement before agreeing to sign, especially on the crucial details such as the monthly due on rent and the lease date.
