More than a third of U.S. households rent their homes. However, not everyone can qualify for a lease. Someone who has low income, does not have a stable job, or has a bad credit history will have difficulty getting approved. Someone you know who fits this description might ask you to co-sign a lease as a requirement by a landlord. Another common scenario: your adult child fresh from college is trying to rent an apartment for the first time. You can help them by co-signing a lease.
So, what is a co-signer?
It’s someone who agrees to be equally responsible for paying the rent and other fees on an apartment. In case the primary applicant you are co-signing with fails to pay rent, you are legally obligated to pay.
Qualifications of a Co-Signor
Not anyone can be a co-signer on a lease. You need to meet certain criteria:
In other words, as a co-signer, you must have the capacity to pay for the rent. You will be asked to submit financial information, agree to a credit check, and co-sign the lease agreement. Your name will be on the lease even though you’re not going to live in the apartment.
This lowers the risk for the landlord since you, as the backup, should be able to meet the rental payments yourself. And so, it makes it easier for the primary applicant to get approved for the lease.
How Does Co-Signing Work?
You are taking on enormous responsibilities when you co-sign an apartment lease. As a co-signer, you are under legal obligation to:
It is highly risky to co-sign a lease. So, you must be aware of what you are getting yourself into.
What to Do Before Co-Signing
Do not blindly co-sign a lease without undertaking not only the responsibilities and risks but also ensuring that you minimize those risks in the first place. Here are things you should do:
If you are unsure about the lessee’s ability to pay, you are not confident about paying the monthly rent on top of your own expenses, or just don’t want the added stress and worry, don’t agree to be a co-signer.
When to Co-Sign a Lease
You probably will feel more comfortable co-signing for your adult child. However, if it’s for a friend or relative, you can consider co-signing only if that person now has a regular and sufficient source of income to pay the rent. If you can vouch for their character and sense of responsibility, then go ahead and be a co-signer.
Don’t Fall for Apartment Listing Scams – Here’s How to Spot Them.