Should You Cosign an Apartment Lease?
When apartment hunting, finding a dream apartment is only step one. A potential renter also has to be approved by a property manager or a landlord to live there. If the renter has little rental history, has bad credit, or makes an income of less than three times the monthly rent, the landlord may not find the potential renter alone qualified to rent the apartment. However, there are ways to prove to a landlord that someone is trustworthy and will pay rent consistently and on time. One way to do this is with a cosigner. If you are asked to be a cosigner, make sure you understand what that entails before you agree to cosign a lease.
What is a cosigner?
A cosigner is someone who signs a lease with a renter and assumes responsibility to pay the rent if the renter fails to do so. When you cosign someone’s lease, you guarantee that you will cover all payable dues owed to the landlord in case the tenant cannot pay up, be that rent or even damages.
So, does that mean I pay their rent?
In short, yes, if or when they miss their payments.
When you cosign on someone’s lease that means you agree to financially cover their housing, in case they can’t do so themselves. If they default on their monthly rent, or if they can’t repay for any damages, it means you have to do so for them. If you also fail to pay, then this may be reported in your credit history and may affect your credit score. Remember, by cosigning the lease documents you become responsible for the apartment as if it were your own, which means in case of failed payments you could even be taken to court.
They’re my gym buddy, does that mean I know them well enough?
Them being your workout partner doesn’t tell you anything about their financial responsibility. Remember, your relationship with the tenant needs to be able to withstand all of the ups and downs of this agreement. If you don’t think you know that person well enough to remain their friend if their lease goes astray, it is probably not a good idea to cosign with them. Make sure that prior to signing on the dotted line, you know their financial habits. Know their spending tendencies and preferably their credit score. Are they fiscally responsible? Do they pay their bills on time? Are they employed and can they hold a job down? Since they’re comfortable asking you to become their co-signer, you should feel the same about requesting to see their bill statements to check for late fees and credit history.
Okay, but they also have a roommate?
You’ve made up your mind that you’re willing to sign for your friend. Then you find out that their boyfriend is moving in with them, and they will also have a housemate. This should have been out on the table from the start, because these new characters should be part of the equation. When you’re co-signing a lease you’re taking on the responsibility for ALL payments that are associated with your friend’s apartment, including if their housemate fails to pay their rent. Even if your friend is a financially stable and responsible person, their housemate may very well not be. This means that if the apartment will have people other than your friend living in it and making payments, you should think twice before agreeing to sign the paperwork.
What happens if even with the additional housemates on the lease you still want to help your friend out? Things can be negotiated, which means you can discuss covering only your friend’s portion of the rent. You may need a lawyer to help you work through the details and draft a new agreement. This will help you be covered from any financial risks.
Becoming a cosigner is a huge responsibility, so make sure to make an educated decision on whether or not you’re ready to cosign your friend’s lease.