Should You Co-Sign a Lease on a Rental?
Have you been asked by a friend or relative to co-sign on the lease for the rental? If so, have you been wondering what that actually entails? As property managers in Redding, California, we would love to help answer any questions that you may have in regards to renting a home or apartment.
So what does it actually mean to be a co-signer on a lease for a rental home or apartment? Basically, when you co-sign your name on a lease, you are giving a legal guarantee that the payment of rent will be paid and any monetary damages suffered by the Owner or Property Management. This guarantees may include late charges, non-reimbursed utility expenses, damages to the leased premises as well as Attorney fees if applicable in the enforcement of the lease. What this means is that, even if the rest of the tenants in the rental are not able to come through on their rent payments, you are guaranteeing that the rent will be paid. Unfortunately, what this means for you is that if a tenant falls short of their rent payment for the month, you are legally required to cover that payment. It also means that if a tenant is late on or does not pay his or her rent payment, or causes any damage to the rental property it will fall back on you and could potentially have a negative effect on your credit score. Late rent payment will be reported back to your credit agencies.
Because there are high financial risks and responsibilities attached to co-signing a lease on a rental, there are some great questions that you can ask yourself before making that decision.
- Based on my current level of income, do I have the financial ability to be able to cover someone else’s rent payment if they are unable to cover it?
- Do I actually want to carry the financial responsibility of potentially having to cover someone else’s rent if they do not come through on their rent payment or cause damage to a rental?
- Do you want to take the risk of potentially having your credit score affected by delayed or unpaid rent payments or unpaid damage charges?
- Even if I do have the financial ability to cover other tenants’ rent payments if necessary, is that responsibility ok with me or would handling that add stress to my life?
- How well do you know the individual asking you to co-sign?
- How long is the period of time required to be a co-signer and is there an out clause after this period of time?
It is important to know what financial state you are currently in and to know yourself in what you do or do not want to handle so that you can ultimately make the best decision for yourself. Most property management required a co-signer to stay on for the life of the lease. Meaning that as long as the tenant you have co-signed for occupies the rental property you are a held to the same financial responsibilities, however, you do not have the same rights as the tenant occupying the rental property. Many owners or property managers will ask for a co-signer if the person applying falls short on income, lacks rental history or has weak credit. If you do consider co-signing for someone, it should be someone who you feel is truly responsible and reliable and won’t leave you holding the responsibility. Sometimes co-signing for the wrong person can be a big financial risk and cause tension in a relationship.
If you have any more questions in regards to co-signing a lease on a rental home or apartment, or would like more information on renting or managing a rental, feel free to give us a call! We have done property management in Redding and the Shasta County for over 20 years and we would love to help you in any way we can! 530-410-6085
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