A screening process with minimum requirements for income, rental history, or credit score is one of the best ways landlords can secure tenants who can pay rent on time. But what about situations where a potential renter doesn’t quite meet those standards but would otherwise make a great tenant? Or what if a tenant lacks rental and employment references because they’re new to renting and the workforce?  

Instead of turning down prospective renters in these scenarios, consider offering the opportunity to have a guarantor or cosigner add their signature to your rental agreement. Having someone with more secure finances share legal responsibility for paying rent, including a guarantor or cosigner on the lease, gives the tenant a chance while mitigating your risk as the property owner. 

But while the terms are sometimes used interchangeably, guarantors and cosigners have a few key distinctions and should be used in different situations. 

Guarantor:  

Someone willing to take on the financial responsibility for a rental agreement if a tenant fails to pay rent or any other required fees. 

Signs the rental agreement but has no right to live in the unit and is not obligated to make any payments until the tenant has defaulted.

Often, it is a parent, another family member, or a friend who is willing to vouch for the tenant. 

Sometimes asked to put up collateral on the rental agreement, which would be forfeited if the tenant failed to pay.

Cosigner: 

Someone who signs the lease and takes on the responsibility of paying rent right from the start. 

Typically has the right to live in the unit, so may be used in situations where the tenant wants a roommate.

They are not only responsible for their share of the rent, but also accountable for their roommate’s portion if they fail to pay. 

Since they’re liable for rental payments alongside the tenant, a missed payment could negatively affect their credit.

Since adding a guarantor or cosigner is meant to minimize risk, make sure to screen them as you would a tenant to ensure they have the kind of income and credit history that supports their ability to pay rent. Write the specifics of the guarantor’s or cosigner’s role in the rental agreement, including when rent and fees are due and how to pay, potential late fees, and contact information. Ensure the guarantor or cosigner receives a full copy of the lease. 

While the assistance of a guarantor or cosigner can’t ensure a new tenancy will be conflict-free, it can be a beneficial way to fill a vacancy. Additionally, it allows your tenant to bolster their credit and rental records at a lower risk to you. When used in the right circumstances, it’s a win-win for both you and your tenants. 

About Rentals America      

Rentals America provides full-service property management for residential rental properties. Our team is wholly dedicated to property management, and we’re here to help landlords navigate the rental market.