Cosigners: Should you allow them?
Many landlords have split opinions about cosigners. Cosigners, often parents of student renters, agree to add their name in the lease agreement, thus gaining the responsibility of paying for rent or damages if the renter fails to pay. Having a cosigner on the lease doesn’t ensure that rent will get paid, but it doesn’t necessarily hurt the lease agreement either. Here are 4 factors to keep in mind when you’re considering whether or not you should allow a cosigner.
1. It can make your job easier to accept cosigners for student renters. Students typically don’t have very much credit history, and might rely on their parents for the majority of their income. A parent asked to pay for the damages or late rent is most likely to follow through, especially when their name is on the lease as well.
2. Be careful about a cosigning relative or friend. The risk of accepting a cosigner is that they have less legal pull than you’d think. In many cases, if a tenant doesn’t pay the rent and the cosigner does not respond to calls from the landlord, it’s actually much more efficient to evict the tenant than to take the issue to small claims court. Cosigners don’t live in your property and have no incentive to pay the rent – except for a very close friend or relative, that is.
3. Cosigners can help ensure that the rent gets paid. If the tenant is aware that you’re able to notify or sue the cosigner if the rent fails to get paid, they’ll take the responsibility of getting the rent to your door much more seriously. Alerting a cosigner of late rent or damage fees may also be more effective than bugging a tenant about the charges yourself, as concerned friends and relatives may step up to fulfill the agreement.
4. Run a credit check. If you decide to permit cosigners to the lease agreement, make sure to run a credit check for the cosigner. It’s important to verify that they have relationship to the tenant and are financially responsible. Draw up a separate agreement or make additions to the existing paperwork to require their contact information and signature.
Legally, you have no obligation to accept or refuse cosigners, except in the case of renting to the disabled. If the person qualifies under all of your tenant requirements, but doesn’t have enough income to pay the rent, he or she can request to have a cosigner, and under the law you cannot refuse this request.