A desperate son, daughter or friend has just asked you to provide a guarantee for the rent of their new apartment. You are their last hope, the only one who can save them from being homeless. But you are not sure what the guarantor's expectations are, or even what it is. It sounds risky and can be expensive. If you are familiar with this situation and have encountered some of these questions, this article is for you.
So, what is the rent guarantor?
The rent guarantor of a residential lease refers to the person who, through the lawful consent of the lessee, takes over the financial obligation of the lease as the guarantor. This usually means that the guarantor is responsible for any rent or property damage that the lessee has failed to pay. A lease agreement like this provides the landlord with a form of insurance that can be offset if the tenant refuses to pay the rent or simply disappears into the thin air.
Being a rent guarantor is a high risk - low return. Worst case: You are carrying someone else's debt. Best case: Your sponsored tenant paid all the rent in time and gave it to you with eternal gratitude.
Why would anyone need it?
The landlord or rental agent may ask the potential tenant for a guarantor for a number of reasons...
- They are either students or young people without a credit history.
- They had a bad credit score because of previous defaults, court orders, and even bankruptcy.
- They just started a new job or didn't make much money.
- They moved in and moved a little, or just returned from abroad.
- They can't get a flash of recommendation from the previous landlord or agent.
A prospective tenant may find themselves in a strange dilemma, having a safe, generous reward for work, but still need a guarantor, possibly due to a catastrophic credit rating or a nomadic lifestyle. If they can't find a guarantor, it's wise to go to other rental agencies in the town; each company has different criteria to determine who is a valuable tenant or a reliable guarantor. If they fail, they have no choice, although providing rent six months in advance is usually the key to a deal.
