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What is a Guarantor? 6 Lease Guarantor FAQs

October 15, 2019

Moving to a new city comes with plenty of new restaurants and places to explore. It also comes with the challenges of landing a new apartment.

In expensive cities that command high rent prices, landlords may have steep demands from their applicants. That’s where a lease guarantor or co-signer comes in handy to help secure your apartment.

So, what is a guarantor?

TL;DR: A lease guarantor is someone who will co-sign on an apartment lease with you. The lease guarantor will pay for your rent in the event that you cannot cover it.

There's a lot to cover and plenty of frequently asked questions about lease guarantors. Let's dive in.

1. What is a Lease Guarantor?

The guarantor’s meaning isn’t always clear to new renters. However, the concept is pretty straightforward. 

A guarantor acts as a guarantee that the rent gets paid during a situation when the tenant can't meet their financial commitment. The guarantor is as responsible for the lease as the tenant. That’s why it's so important to make sure everyone understands and agrees to the terms.

Things can get messy if everyone isn’t clear on the terms of a guarantor lease, missed payments, and how to break a lease with minimal penalty. If a tenant decides to sublet their apartment to someone else, the original guarantor is still responsible for the rent and subsequent lease renewals. 

In this case, the lease guarantor should ask the landlord to remove them from the lease. Otherwise, they could be on the hook for paying the rent for a laundry list of tenants coming and going.

2. Are Co-signer and Guarantors the Same Thing?

Most landlords use terms like co-signers and guarantors on a lease interchangeably. That can create confusion. 

Technically, a guarantor is responsible for stepping in and paying rent if it’s unpaid. However, a co-signer may be someone who is added to the lease as another tenant who has the right to occupy an apartment.

However, depending on the city, your landlord may use different terms. San Francisco typically calls anyone added to the lease who is guaranteeing the rent a “co-signer.” 

In New York City, landlords call this person the “guarantor” for an apartment. Regardless of where you're looking to rent an apartment, ask to clarify the lease language with the landlord if there’s any mention of a guarantor or co-signer. That way, everyone will be on the same page.

3. When Do I Need a Co-signer or Guarantor?

Some cities are so prohibitively expensive that they require a lease guarantor or co-signer before you receive the keys to your new apartment. Some New York City landlords ask that tenants earn 40 times the monthly rent or require a guarantor as insurance of sorts.

That means if your rent is $3,000, landlords want proof that you earn at least $120,000 a year. A landlord may also request a co-signer or guarantor on an apartment if you have no credit history or poor credit.

4. What Are The Requirements For Guarantors and Co-signers?

Guarantors and co-signers may face even more stringent requirements than the lease signers. In New York City, guarantors are often required to make at least 80 to 100 times the monthly rent in order to sign. 

Wherever you live, landlords want co-signers and guarantors to have a stellar credit history that proves their financial stability and responsibility. 

Most landlords will make it abundantly clear what kind of financial guarantee they want from a lease. But just in case, make sure to read all of the legalese of the lease. Ask your landlord plenty of questions. 

Landlords may not be using the terms you’re expecting. They may call a “guarantor” a “co-signer.” 

However, taking on a co-signer could mean your dad is now legally able to live in your apartment. In another scenario, co-signing with your bestie and expecting them to move in could complicate your life when you realize your friend is actually on the hook to guarantee your rent.

5. How Do I Find a Guarantor or Co-signer for My Lease?

Guarantors and co-signers typically aren’t casual acquaintances or younger friends just starting out in their careers. Instead, ask a family member, a close friend, or possibly an understanding employer with a good credit score and heart of gold to guarantee your lease. 

But if your mom asks, “So what is a guarantor, anyway?” with her pen poised over the lease, make sure to cover all of the details and expected commitment. 

The landlord will also likely ask for detailed information about your guarantor's finances, credit history, and willingness to step up and pay rent if necessary. Therefore, it’s important that everyone is comfortable with the arrangement.

There are other factors to consider beyond finances when tapping a guarantor or co-signer for the role. If you unexpectedly lose your job, will your guarantor or co-signer willingly step up without things getting awkward? Will not paying rent complicate your relationship and trips back home? After all, no one wants to talk about missed rent payments over Thanksgiving dinner.

6. What if I can’t find a guarantor or co-signer?

It's not the end of the world if you can't find a guarantor or co-signer for your lease. It just takes some creativity to work around the rules and snag your new apartment. 

Some companies like Insurent Lease Guaranty will step in and act as your lease guarantor or co-signer. They may have fewer income and employment requirements. 

These types of companies usually charge a fee of up to 85 percent of one month's rent. You can also ask your landlord if you can pay a higher monthly rent to offset the potential cost of you bailing on a future payment. 

Other options are to look for a sublet situation or find roommates who don’t need you to sign a lease. You could also shop around for a more flexible and understanding landlord.

Ready to move to the city of your dreams but need an apartment guarantor? Do your legwork early and build up some good faith with your friends and family. Try to build an impressive emergency fund to cover your rent in a pinch.

By: Justin Chaplin
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