Co-Signers & Guarantors: Helping to Fill Those Vacancies
Being a landlord in today’s economic climate is a difficult job. You want to help people, but at the same time, you need to protect yourself from the financial damage and community chaos that can be wrought by selecting the wrong tenant. Poor credit, unverifiable sources of income, and lots of moving around from place to place are signs of a possible no-no when it comes to choosing whom to rent to and whom to avoid.
There May Be a Solution
So, that being said, let’s get down to an important issue when it comes to Tenant Screening: Co-signers & Guarantors. Should you have a questionable applicant attempting to set up a lease contract with you, having them produce a solid co-signer or guarantor can mean the difference between making and breaking the deal.
Finding a Different Way to Ensure the Rent Will Be Made
When you find that an applicant has an improper level of income, bad credit, shaky rental history, or poor or no references, but you need to fill a vacancy quickly, you may be wondering what the best course of action to take is. Try asking the applicant, before you accept them and sign the lease, whether they have a friend, relative, or spouse that is willing to co-sign the lease and guarantee that rent will be paid when it is due. This way, you have a much greater chance of having fewer hassles to deal with down the road.
What Exactly is a Guarantor?
A guarantor is someone who signs the lease along with the leasee, taking on the financial obligation under the lease contract. The guarantor doesn’t actually become a tenant or occupant, but is still bound to the lease. This means that, if the tenant doesn’t pay the lease on time, you, as the landlord, can come to the guarantor for the money, and they are legally obligated to pay.
Once a guarantor has signed the lease, they are legally bound to ensure that the rent is paid for the remainder of the lease term, so there is no backing out once the contract is signed. If the term of the lease is for twenty-four months, then the guarantor is the guarantor for that entire period of time. If that person no longer wishes to act in that capacity, he or she must wait until the end of the lease term. Once the lease expires, the guarantor is no longer legally obligated to ensure that rent is paid.
What if the Guarantor Changes Their Mind?
The guarantor’s role only really comes into play in the unfortunate event that the tenant misses a rent payment. If, for some reason, the guarantor changes their mind and is trying to get out of their legal obligations under the lease contract, it is basically your choice as the landlord to decide whether to let them out of the contract. You may decide that the tenant’s overall financial situation has improved, or feel more comfortable about leasing to the tenant on their credit alone, but it is generally wiser to try to keep the guarantor in the agreement that they originally signed on to, in order to protect yourself and your property.