Renting

What is a rent guarantor? And why you may need one.

They are usually required when a prospective tenant has bad or no credit, no rental history, or income too low to qualify.

By Robyn A. Friedman -- Globe Correspondent

June 14, 2024

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When Debby Belt was asked to guarantee the lease for her 22-year-old daughter’s apartment, she wasn’t surprised. After all, Belt had already served as a guarantor for another one of her kids, plus, as a senior associate at Hammond Residential Real Estate in Chestnut Hill, she already knew the drill and expected the guarantee since her daughter was a recent college graduate who lacked the necessary credit history to qualify on her own.

“She was employed and had a good job, but since it was a first apartment, the landlord asked that the parents guarantee the rent,” Belt said. 

Lease guarantors serve as financial backups for tenants a landlord deems risky. Should a tenant fail to pay the rent on time, the guarantor is responsible. Guarantors are different than cosigners, who actually sign the lease and are entitled to occupancy. Cosigners have primary liability for paying the rent, while a guarantor is responsible only if the tenant who signed the lease defaults. 

“When you cosign a lease, you have all the benefits of a tenant, so you get a right to possession of the property and could live in it if you wanted to,” said Hillery Dorner, a real estate attorney with Dorner Law & Title Services PC in Concord. “A guarantor has no rights to the unit. They just have an obligation to pay.” 

Guarantors are usually required when a prospective tenant has bad or no credit, no rental history, or income too low to qualify. They are frequently required for students or recent college graduates, for whom parents often serve as guarantors, or renters who are not US citizens. Rent guarantees are required by both institutional and mom-and-pop landlords. Van French, director of rentals for Gibson Sotheby’s International Realty in Boston, said landlords require guarantors in about 25 percent of the rental deals he sees. 

Morgan Franklin, an agent with Coldwell Banker Realty in Boston, said guarantors are expected to complete a rental application just like a tenant would. The landlord will check their credit and verify income and employment. Guarantors need to have sufficient income to cover both the lease and their own mortgage and other debts, Franklin said. 

Anyone considering serving as a guarantor needs to assess the risk of doing so. Parents who are approaching retirement, for example, might find themselves liable for paying off a lease if the child whose obligation they guaranteed loses a job or is unable to work. 

“Have an understanding of what you’re getting into,” said French. “It’s a legal obligation — make sure you’re financially prepared.” 

Before signing a lease guarantee, consider the following:

The guarantee is negotiable. Belt’s daughter was sharing a three-bedroom apartment in Washington Square with two roommates. To avoid being on the hook for the entire lease, Belt negotiated with the landlord to ensure she guaranteed only her daughter’s portion of the rent. 

There might be alternatives. In lieu of requiring a guarantor, some landlords may accept a lease guarantee from a company like TheGuarantors. The cost of the insurance, a product similar to the private mortgage insurance lenders require for some home buyers, typically ranges from about half to more than one month’s rent, depending on the rent, amount of coverage, and renter risk, according to Julien Bonneville, the company’s founder and chief executive officer. 

Have a serious conversation. Make sure the tenant (most likely, your child) understands her responsibility to pay the rent — and that she can’t expect you to bail her out. Your goal is to help kids become financially responsible so they can qualify for a lease on their own  — not to help them achieve a lifestyle they can’t otherwise afford.